Question

Suppose the value of the price elasticity of supply is 4. What does this mean?

A. A 1 percent increase in the price of the good causes the supply curve to shift upward by 4 percent.*

B. For every $1 increase in price, the quantity supplied increases by 4 units.

C. A 4 percent increase in the price of the good causes quantity supplied to increase by 1 percent.

D. A 1 percent increase in the price of the good causes quantity supplied to increase by 4 percent.