Suppose That After a 10 Per Cent Increase in the Price

Multiple Choice

Suppose that after a 10 per cent increase in the price of timber, a forestry-company increases its supply of timber by four per cent in the next three months, and eight per cent by 12 months. This means that the elasticity of supply is _____.

A) 0.4 at three months and 0.8 at 12 months
B) 0.8 at three months and 0.4 at 12 months
C) 2.5 at three months and 1.25 at 12 months
D) 1.25 at three months and 2.5 at 12 months