A seller increased the quantity he offered for sale from 200 units to 250 units when the price of his product…

Step 1: Analyze the question We need the price elasticity of supply (PES), which measures how responsive the quantity supplied is to a change in price.

Step 2: The concept

PES = % change in quantity supplied ÷ % change in price

Step 3: Solution

• Change in quantity = 250 − 200 = 50 units
• % change in quantity supplied = (50 ÷ 200) × 100 = 25%
• % change in price = 12.5% (given)

PES = 25% ÷ 12.5% = 2.00

Since PES > 1, supply is elastic. This means producers increase quantity supplied by a larger proportion than the price rise.

Step 4: Answer The correct option is A. 2.00.

Tip: When the question gives an initial and a new quantity, use the original figure (here, 200) as the base for the percentage change. Using 250 or the average would give a different result. Also remember that PES is normally positive because price and quantity supplied move in the same direction. Always check: if the quantity changes by a bigger percentage than the price, the answer must be greater than 1.