Question

What is the price elasticity of supply? Can you explain it in your own words?

Short answer

The percentage change in the quantity supplied divided by the percentage change in the price is used to calculate the price elasticity of supply.

Step-by-step solution

Concept

Supply of product refers to the quantity of products sellers are willing and able to sell at different price levels.

Explanation

Price elasticity of supply is an economic metric that determines how closely a product's or service's price is related to the amount delivered. In other words, it demonstrates how a price shift affects providers' willingness to produce a good or service. The responsiveness of supply to price changes is measured by "price elasticity of supply." Price elasticity of supply is calculated by dividing the percentage change in quantity supplied by the percentage change in price.