Question
How to calculate price elasticity supply
Answers
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The price elasticity of supply = % change in quantity supplied / % change in price.
When calculating the price elasticity of supply, economists determine whether the quantity supplied of a good is elastic or inelastic.
PES > 1: Supply is elastic. PES < 1: Supply is inelastic. PES = 0: if the supply curve is vertical, and there is no response to prices. PES = infinity: if the supply curve is horizontal.
When calculating the price elasticity of supply, economists determine whether the quantity supplied of a good is elastic or inelastic.
PES > 1: Supply is elastic. PES < 1: Supply is inelastic. PES = 0: if the supply curve is vertical, and there is no response to prices. PES = infinity: if the supply curve is horizontal.