Principles of Macroeconomics 7th Edition

Published by South-Western College
ISBN 10: 1-28516-591-8
ISBN 13: 978-1-28516-591-2

Chapter 5 - Elasticity and Its Application - Questions For Review - Page 108: 7

Answer

Price elasticity of supply is calculated as % change in quantity supplied/ % change in price. This simply measures how a quantity supplied reacts to changes in price.

Work Step by Step

Use the formula to calculate the price elasticity of supply to determine how the producers respond to changes in the market and interact with the buyers in the market place.
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