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Economics (AS & A Level) · May / June 2021 · Paper 13 · Question 8

9708Price elasticity of supply

A car manufacturer estimates that the price elasticity of supply of its cars is +2.5. What will be the impact of a 10% increase in price?

  1. Aa 2.5% fall in total revenue
  2. Ba 25% rise in total revenue
  3. Ca 2.5% fall in quantity supplied
  4. Da 25% rise in quantity supplied

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Correct answer: D. a 25% rise in quantity supplied

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