What does the price elasticity of supply measure?
Understand the Problem
The question is asking for an explanation of the concept of price elasticity of supply, which refers to how the quantity supplied of a good or service changes in response to a change in its price. It helps understand the responsiveness of producers to price changes in the market.
Answer
The responsiveness of the quantity supplied to changes in price.
The price elasticity of supply measures the responsiveness of the quantity supplied to changes in price. It is the percentage change in quantity supplied divided by the percentage change in price.
Answer for screen readers
The price elasticity of supply measures the responsiveness of the quantity supplied to changes in price. It is the percentage change in quantity supplied divided by the percentage change in price.
More Information
Price elasticity of supply is crucial for understanding how various factors, like technological improvements or changes in production costs, can affect the supply curve.
Tips
A common mistake is confusing price elasticity of supply (which focuses on quantity supplied in response to price changes) with price elasticity of demand (which focuses on quantity demanded).
Sources
- The web page with info on - Example Source - open.lib.umn.edu
- Solved The price elasticity of supply measures how | Chegg.com - chegg.com
- 6.3: Price Elasticity of Supply - Social Sci LibreTexts - socialsci.libretexts.org
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