Price elasticity of supply measures the degree of responsiveness of supply of a product due to a change in the price of that product.
“Price elasticity of supply measures how responsive producers are to a change in the price of good. It is defined as a measure of the responsiveness of quantity supplied to change in price”
Measurement and Formula:
It is measured by dividing the percentage change in quantity supplied by the percentage change in price. Thus the percentage Method formula is:
It can also be written as:
Just like demand, supply can also be elastic or inelastic.
Elasticity of supply:
Elasticity of supply represents the extent of change in supply in response to a change in price. If the amount supplied is highly response to a change in price, the supply is said to be elastic.