The supply of product X is considered elastic if, when the price of X rises by 10%, the quantity supplied:

• A. increases by more than 10%
• B. increases by less than 10%
• C. decreases by 10%
• D. does not change

Answer: (A)

Verified step by step guidance

1. Understand the concept of price elasticity of supply, which measures how much the quantity supplied of a good responds to a change in its price.
2. Recall the formula for price elasticity of supply: \(\text{Elasticity} = \frac{\% \text{ change in quantity supplied}}{\% \text{ change in price}}\).
3. Analyze the given price change: the price of product X rises by 10%, so \(\% \text{ change in price} = +10\%\).
4. Determine what it means for supply to be elastic: if the elasticity is greater than 1, the quantity supplied changes by a larger percentage than the price change.
5. Apply this to the problem: for supply to be elastic when price rises by 10%, the quantity supplied must increase by more than 10%, meaning \(\% \text{ change in quantity supplied} > 10\%\).