Chapter 6 problem 5 from the book The Micro Economy Today 13

Chapter 6 problem 5 from the book The Micro Economy Today 13e

Solution

Q. How the elasticity of supply measures?

Ans-It measures the degree of response of supply of a good to change in its price. It measures the percentage change in quantity supplied of a good due to one percent change in its price.

“Price elasticity of supply is a measure of the degree of responsiveness of quantity supplied to change in the product’s own price”

Es= percentage change in quantity supplied/ percentage change in price

Types of Price Elasticity of Supply-

1. Perfectly Inelastic Supply- it is also called Zero elastic .In short period ,A firm cannot change the quantity of output which is already produced.

2. Inelastic Supply- In this case , the value of price elasticity of supply is less than one.

3. Elastic Supply- in this case the value of price elasticity of supply is greater than one.

4. Unit Elastic Supply- In this case the value of price elasticity of supply is equal to one.

5. Perfectly elastic Supply- in this case the value of price elastisity is is infinity .