AP MicroeconomicsElasticity
Price Elasticity of Supply
Price elasticity of supply measures how responsive the quantity supplied is to a change in price.
It is calculated as the percentage change in quantity supplied divided by the percentage change in price. Supply is considered elastic if the ratio is greater than 1, meaning the quantity supplied changes more than the price. Supply is inelastic if the ratio is less than 1.
Formula / Example
Price Elasticity of Supply = (% Change in Quantity Supplied) / (% Change in Price)
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