Question

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

Short answer

Percentage variation in the quantity supplied divided by the percentage variation in price is termed as price elasticity of supply.

Step-by-step solution

Step 1. Introduction:

Elasticity is a concept which analyzes the sensitivity of one parameter such as demand for a product to variations in another parameter such as price.

Step 2. Explanation:

The price elasticity of supply is the degree to which quantity supplied corresponds to a variation in price. In other words, the price elasticity of supply is the percentage variation in quantity supplied divided by the percentage variation in price.