Price Elasticity of Supply for Lithium

Steps:

• Note the 10% increase in lithium price.
• Note the 15% increase in lithium supply quantity.
• Use PES formula: percentage change in quantity supplied divided by percentage change in price.
• Calculate: 15% / 10% = 1.5.

Why C is correct:

• PES measures responsiveness of quantity supplied to price change; formula %ΔQS / %ΔP = 1.5 matches option C.

Why the others are wrong:

• A. 0.3: Misapplies formula by inverting and halving (e.g., 5/15).
• B. 0.6: Inverts ratio (10/15 ≈ 0.67, rounded down) but ignores supply direction.
• D. 2.0: Adds percentages (10% + 15% = 25%, then miscalculates) instead of dividing.

Final answer: C