explain how an economist can determine whether the supply of a product is elastic or inelastic
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The price elasticity of supply = % change in quantity supplied / % change in price. When calculating the price elasticity of supply, economists determine whether the quantity supplied of a good is elastic or inelastic.
1)By dividing the percent change in Q.S by the percent change in price, the price elasticity of supply (PES) is calculated.
2)A change in price results in a smaller proportional change in supply quantity when there is inelastic supply.
3)A change in price results in a larger proportional change in supply when there is elastic supply.
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