What is Price Elasticity of Supply?
Price Elasticity shows how the quantity supplied behaves in response to changes in the price of the commodity. It measures the degree of responsiveness of the quantity supplied to the change in price. Price Elasticity of supply undertakes how the supply of a particular product responds to price fluctuations. Price Elasticity is generally depicted as ES. During the calculation of the elasticity of supply, the percentage change in price and the percentage change in quantity supplied are the two factors that need to be considered.
ES =
Price Elasticity of Supply : Type, Determinants and Methods
The Law of Supply states that, with other factors being constant, the quantity supplied increases with a price increase and decreases with a decrease in the price of the commodity. The degree of change in quantity supplied in response to changes in price is known as Price Elasticity of Supply. Price Elasticity of supply undertakes how the supply of a particular product responds to price fluctuations. The degree of change in supply due to changes in price is depicted by calculating the Price Elasticity of Supply.