Economics Supply And Demand Questions
The concept of elasticity of supply refers to the responsiveness of the quantity supplied of a good or service to changes in its price. It measures the degree to which the quantity supplied changes in proportion to a change in price. Elasticity of supply can be elastic, inelastic, or unitary. If the supply is elastic, it means that a small change in price will result in a relatively larger change in quantity supplied. In contrast, if the supply is inelastic, it means that a change in price will result in a relatively smaller change in quantity supplied. Unitary elasticity of supply occurs when the percentage change in price is equal to the percentage change in quantity supplied.