Price Elasticity of Supply Formula

Steps:

• Recall price elasticity of supply (Es) = (% change in quantity supplied) / (% change in price).
• Given Es = 1.5 and % change in price = 20%.
• Calculate % change in quantity supplied = Es × % change in price = 1.5 × 20% = 30%.
• This means supply increases by 30%.

Why D is correct:

• The formula for price elasticity of supply directly multiplies the elasticity coefficient by the percentage price change to find the quantity supplied response.

Why the others are wrong:

• A: 0.3% results from dividing 20% by elasticity instead of multiplying.
• B: 3% misapplies elasticity as a fraction of price change (e.g., 20% / (1.5 × 3.33)).
• C: 13% has no direct calculation tie; likely an arbitrary subtraction or miscalculation.

Final answer: D