Which statement best defines elastic supply?

Which statement best defines elastic supply?

• A. A 1 percent change in price causes a larger percentage change in quantity supplied.
• B. The good in question is a normal good.
• C. The slope of the supply curve is positive.
• D. A 1 percent change in price causes a smaller percentage change in quantity supplied.

Answer: (A)

Elastic supply means the quantity supplied changes more than proportionally when the price changes. In other words, the price elasticity of supply exceeds one, so a small price change leads to a larger percentage change in quantity supplied. The statement that a 1 percent change in price causes a larger percentage change in quantity supplied matches this idea exactly, making it the best description of elastic supply. The idea that a good is normal relates to how demand shifts with income, not how supply responds to price. The slope of the supply curve being positive is a general feature of upward-sloping supply, but elasticity is about how big the response is to price changes, not just the direction of the slope. The opposite situation—where a 1 percent price change yields a smaller percentage change in quantity supplied—describes inelastic supply.

Elastic supply means the quantity supplied changes more than proportionally when the price changes. In other words, the price elasticity of supply exceeds one, so a small price change leads to a larger percentage change in quantity supplied. The statement that a 1 percent change in price causes a larger percentage change in quantity supplied matches this idea exactly, making it the best description of elastic supply. The idea that a good is normal relates to how demand shifts with income, not how supply responds to price. The slope of the supply curve being positive is a general feature of upward-sloping supply, but elasticity is about how big the response is to price changes, not just the direction of the slope. The opposite situation—where a 1 percent price change yields a smaller percentage change in quantity supplied—describes inelastic supply.