Economics Consumer Surplus And Producer Surplus Questions
Price elasticity of supply is a measure of the responsiveness of the quantity supplied of a good or service to a change in its price. It quantifies the percentage change in quantity supplied divided by the percentage change in price. If the price elasticity of supply is greater than 1, supply is considered elastic, meaning that a small change in price leads to a relatively larger change in quantity supplied. If the price elasticity of supply is less than 1, supply is considered inelastic, indicating that a change in price has a relatively smaller impact on the quantity supplied. A price elasticity of supply equal to 1 represents unitary elasticity, where the percentage change in quantity supplied is equal to the percentage change in price.