The increase in price % in order to enhance the quantity supplied by 20% would be:
b). 8%
Price Elasticity
Given that,
Price elasticity of supply(Crude Oil) [tex]= 2.5[/tex]
Increase in quantity supplied = 20%
To find,
% increase in the price of the quantity = ?
As we know,
Price elasticity of Supply = %change in quantity supplied/% change in price
By applying the given values,
[tex]2.5 = 20/[/tex]% change in price
∵ % change in price [tex]= 20/2.5[/tex]
[tex]= 8[/tex]%
Thus, option B is the correct answer.
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