To calculate the price elasticity of supply we divide
A) the percentage change in price by the percentage change in quantity supplied.
B) the percentage change in quantity supplied by the percentage change in price.
C) the rise by the run.
D) the average price by the average quantity supplied.

Question

Quizplus · Accepted Answer

Price elasticity of supply is a measure of the responsiveness of the quantity supplied of a good to a change in its price. It is calculated by dividing the percentage change in quantity supplied by the percentage change in price. Option A is incorrect because it reverses the numerator and denominator of the formula. Option C is the formula for calculating slope, not price elasticity of supply. Option D is unrelated to the formula for price elasticity of supply.

To Calculate the Price Elasticity of Supply We Divide