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Chapter 5: Q.12 (page 130)

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

Short Answer

Expert verified

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

Step by step solution

01

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.

02

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.

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Most popular questions from this chapter

In competitive markets, farmers adopt new technologies that will eventually reduce their revenue because

a. each farmer is a price taker.

b. farmers are short-sighted.

c. regulation requires the use of best practices.

d. consumers pressure farmers to lower prices.

Suppose the cross-price elasticity of apples with respect to the price of oranges is 0.4, and the price of oranges falls by 3%. What will happen to the demand for apples?

What do we call a good with an income elasticity less than zero?

Why is the supply curve with constant unitary elasticity a straight line?

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