1. What is Price Elasticity of Supply?

Price elasticity of supply measures the responsiveness of quantity supplied to changes in price. It indicates how much the quantity supplied changes when the price changes by 1%.

2. How Does the Calculator Work?

The calculator uses the price elasticity of supply formula:

Where:

• \( E_s \) — Price elasticity of supply (dimensionless)
• \( \%\Delta Q_s \) — Percentage change in quantity supplied (%)
• \( \%\Delta P \) — Percentage change in price (%)

Explanation: The formula calculates the ratio of percentage change in quantity supplied to percentage change in price, indicating how responsive producers are to price changes.

3. Importance of Price Elasticity of Supply

Details: Understanding supply elasticity helps businesses make production decisions, governments design tax policies, and economists analyze market dynamics and producer behavior.

4. Using the Calculator

Tips: Enter percentage change in quantity supplied and percentage change in price as decimal numbers or percentages. Both values are required for calculation.

5. Frequently Asked Questions (FAQ)

Q1: What do different elasticity values mean?
A: E_s > 1 = elastic supply; E_s < 1 = inelastic supply; E_s = 1 = unit elastic; E_s = 0 = perfectly inelastic; E_s = ∞ = perfectly elastic.

Q2: What factors affect supply elasticity?
A: Production time, availability of inputs, technology, storage capacity, and mobility of factors of production.

Q3: How is supply elasticity different from demand elasticity?
A: Supply elasticity measures producer responsiveness to price changes, while demand elasticity measures consumer responsiveness.

Q4: Can supply elasticity change over time?
A: Yes, supply is typically more elastic in the long run as producers have more time to adjust production capacity.

Q5: What are practical applications of supply elasticity?
A: Used in agricultural planning, manufacturing decisions, tax incidence analysis, and market equilibrium studies.