ECONOMICS
ELASTICITY OF DEMAND
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Detailed explanation-1: -If the change in quantity supplied is proportional to the change in price then the supply is unit elastic. Thus given that the supply is unit elastic if the price doubles then the quantity supplied will also double as a consequence.
Detailed explanation-2: -The price elasticity of supply has a range of values: PES > 1: Supply is elastic. PES < 1: Supply is inelastic. PES = 0: The supply curve is vertical; there is no response of demand to prices.
Detailed explanation-3: -The price elasticity of supply (PES) is measured by % change in Q.S divided by % change in price.
Detailed explanation-4: -A price elasticity supply greater than one means supply is relatively elastic, where the quantity supplied changes by a larger percentage than the price change.