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Understanding Elasticity of Supply

Use the drop-down menu to complete each statement.

A good is considered _______ when producers can quickly supply more or less of it based on changing prices.

A good is considered _______ when producers cannot quickly change how much of it is supplied when prices change.



Answer :

GinnyAnswer

Final answer:

Price Elasticity of Supply measures the responsiveness of quantity supplied to price changes.


Explanation:

Price Elasticity of Supply: The price elasticity of supply measures how responsive the quantity supplied of a good is to a change in price. It is calculated by dividing the percentage change in quantity supplied by the percentage change in price.

Elasticity Categories:

  • Price Elastic: When elasticity is greater than 1, the good is considered elastic.
  • Unit Price Elastic: An elasticity of 1 indicates unit elasticity.
  • Price Inelastic: Elasticity less than 1 signifies inelastic goods.

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