What does an elasticity of supply greater than 1 signify?

What does an elasticity of supply greater than 1 signify?

• A. Supply is inelastic
• B. Supply is elastic
• C. Supply remains constant
• D. Supply is perfectly inelastic

Answer: (B)

An elasticity of supply greater than 1 indicates that the quantity supplied is quite responsive to changes in price. This scenario is characterized as elastic supply. When the elasticity value exceeds 1, it means that a percentage change in price results in a larger percentage change in the quantity supplied. For instance, if the price of a product increases by 10% and the quantity supplied increases by more than 10%, the supply is termed elastic. This flexibility allows producers to adjust their output levels more readily in response to market price changes, reflecting a dynamic and responsive supply curve. In contrast, other scenarios, such as inelastic supply (where the elasticity is less than 1), suggest that changes in price do not significantly alter the quantity supplied, demonstrating a more rigid response.

An elasticity of supply greater than 1 indicates that the quantity supplied is quite responsive to changes in price. This scenario is characterized as elastic supply. When the elasticity value exceeds 1, it means that a percentage change in price results in a larger percentage change in the quantity supplied. For instance, if the price of a product increases by 10% and the quantity supplied increases by more than 10%, the supply is termed elastic. This flexibility allows producers to adjust their output levels more readily in response to market price changes, reflecting a dynamic and responsive supply curve. In contrast, other scenarios, such as inelastic supply (where the elasticity is less than 1), suggest that changes in price do not significantly alter the quantity supplied, demonstrating a more rigid response.