Q7Managerial Economics & Financial Accounting
Question
2 marks
Define price Elasticity of supply.
Answer
Price elasticity of supply measures the responsiveness of quantity supplied to a change in price.
Price Elasticity of Supply is a quantitative measure of the degree of responsiveness of the quantity supplied of a commodity to a change in its own price.
It is calculated as the percentage change in quantity supplied divided by the percentage change in price.