Economics Elasticity Of Supply Questions
The price elasticity of supply is interpreted as a measure of the responsiveness of the quantity supplied to changes in price. It indicates the percentage change in quantity supplied in response to a 1% change in price. A price elasticity of supply greater than 1 indicates that supply is elastic, meaning that a small change in price leads to a relatively larger change in quantity supplied. A price elasticity of supply less than 1 indicates that supply is inelastic, meaning that a change in price has a relatively smaller effect on quantity supplied. A price elasticity of supply equal to 1 indicates unitary elasticity, where the percentage change in quantity supplied is equal to the percentage change in price.