1.

Give the meaning of price elasticity of supply and write its formula.

Answer»

The price elasticity of supply refers to the proportionate change in the quantity supplied of a commodity due to change in its price. In other words, the price elasticity of supply of a good measures the responsiveness of quantity supplied to changes in the price of the good. It is measured with the help of the following formula:

Price elasticity of supply = (Percentage change in quantity supplied/Percentage change in price)



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