Question

Define supply. How can elasticity of supply be measured

Answer 1

◆Responsiveness of producers to changes in the price of their goods or services. As a general rule, if prices rise so does the supply.

◆Elasticity of supply is measured as the ratioof proportionate change in the quantity supplied to the proportionate change in price. High elasticity indicates the supply is sensitive to changes in prices, low elasticity indicates little sensitivity to price changes, and no elasticity means no relationshipwith price. Also called price elasticity of supply.

Answer 2

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