Concept:Price elasticity of supply measures how strongly quantity supplied responds to a change in price.
Explanation:A
6% decrease in price causes a fall in quantity supplied.
This fall is said to be more than
6%, i.e. the percentage decrease in quantity supplied is greater than the percentage decrease in price.
Elasticity of supply is:
Elasticity=% change in price% change in quantity suppliedHere, the numerator is greater than the denominator in absolute terms.
Therefore, the value of elasticity is greater than
1.
When the percentage change in quantity supplied exceeds the percentage change in price, supply is said to be elastic.
This is in line with the law of supply, which states that price and quantity supplied move in the same direction.
Answer:A. elastic