Economics Elasticity Of Supply Questions
The cross-price elasticity of supply measures the responsiveness of the quantity supplied of one good to a change in the price of another related good. It is interpreted as a percentage change in the quantity supplied of one good divided by the percentage change in the price of the related good. A positive cross-price elasticity of supply indicates that the two goods are substitutes in production, meaning that an increase in the price of one good will lead to an increase in the quantity supplied of the other good. Conversely, a negative cross-price elasticity of supply suggests that the two goods are complements in production, implying that an increase in the price of one good will result in a decrease in the quantity supplied of the other good.