Suppose that in the market for ice cream the elasticity of supply is equal to 1.50. How would a 10% increase in the price of ice cream affect the quantity of ice cream supplied?

The quantity will decline by 15%.

Step-by-step explanation:

Elasticity of Demand = % Change in quantity / % Change in price

ð 1.50 = % change in quantity / 10

ð Percentage change in quantity = 15%

Percentage change in quantity shows an inverse relation with respect to the percentage change in price. In this case of ice-cream, a 10% jump in the price will result the quantity to fall by 15%.