{"id":182375,"date":"2025-01-13T18:00:24","date_gmt":"2025-01-13T18:00:24","guid":{"rendered":"https:\/\/learnexams.com\/blog\/?p=182375"},"modified":"2025-01-13T18:00:28","modified_gmt":"2025-01-13T18:00:28","slug":"what-does-price-elasticity-of-supply-measure","status":"publish","type":"post","link":"https:\/\/www.learnexams.com\/blog\/2025\/01\/13\/what-does-price-elasticity-of-supply-measure\/","title":{"rendered":"What does price elasticity of supply measure"},"content":{"rendered":"\n

What does price elasticity of supply measure? how responsive price is to a change in quantity demanded how responsive supply is to a change in price how responsive price is to a change in quantity supplied how responsive quantity supplied is to a change in price <\/p>\n\n\n\n

If the price elasticity of supply for steel is 0.97, then the price elasticity of supply for steel is Operfectly elastic. Orelatively elastic. unit elastic. perfectly inelastic. relatively inelastic.<\/p>\n\n\n\n

The Correct Answer and Explanation is :<\/strong><\/mark><\/p>\n\n\n\n

Answer:<\/h3>\n\n\n\n
    \n
  1. What does price elasticity of supply measure?<\/strong>
    Price elasticity of supply measures how responsive quantity supplied is to a change in price<\/strong>.<\/li>\n\n\n\n
  2. If the price elasticity of supply for steel is 0.97, then the price elasticity of supply for steel is:<\/strong>
    Relatively inelastic.<\/strong><\/li>\n<\/ol>\n\n\n\n
    \n\n\n\n

    Explanation:<\/h3>\n\n\n\n

    1. Price Elasticity of Supply (PES):<\/strong>
    PES quantifies the responsiveness of the quantity of a good supplied to a change in its price. The formula for calculating PES is:<\/p>\n\n\n\n

    [
    PES = \\frac{\\text{Percentage change in quantity supplied}}{\\text{Percentage change in price}}
    ]<\/p>\n\n\n\n

      \n
    • If PES > 1, supply is elastic<\/strong> (quantity supplied responds significantly to price changes).<\/li>\n\n\n\n
    • If PES < 1, supply is inelastic<\/strong> (quantity supplied responds less proportionately to price changes).<\/li>\n\n\n\n
    • If PES = 1, supply is unit elastic<\/strong> (quantity supplied changes proportionately to price changes).<\/li>\n<\/ul>\n\n\n\n

      2. Why 0.97 is relatively inelastic:<\/strong>
      A PES value of 0.97 is close to but less than 1. This means that a 1% increase in price leads to less than a 1% increase in the quantity of steel supplied. Since the response is not proportional, the supply of steel is relatively inelastic<\/strong>.<\/p>\n\n\n\n

      3. Factors influencing steel\u2019s PES:<\/strong><\/p>\n\n\n\n

        \n
      • Production Time:<\/strong> Steel production involves long processes, so it is difficult to adjust supply quickly.<\/li>\n\n\n\n
      • Availability of Inputs:<\/strong> Steel production depends on raw materials like iron ore, which may have limited availability.<\/li>\n\n\n\n
      • Capacity Constraints:<\/strong> If producers operate near full capacity, increasing supply further is challenging.<\/li>\n<\/ul>\n\n\n\n

        4. Practical Implications:<\/strong>
        Inelastic supply means price changes significantly affect revenue. For instance, if demand for steel increases suddenly, prices may rise substantially because producers cannot immediately increase supply. Similarly, a drop in price may not lead to a significant decrease in supply in the short run.<\/p>\n\n\n\n

        Understanding PES helps policymakers and businesses predict how markets react to price changes and plan accordingly.<\/p>\n","protected":false},"excerpt":{"rendered":"

        What does price elasticity of supply measure? how responsive price is to a change in quantity demanded how responsive supply is to a change in price how responsive price is to a change in quantity supplied how responsive quantity supplied is to a change in price If the price elasticity of supply for steel is […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"site-sidebar-layout":"default","site-content-layout":"","ast-site-content-layout":"default","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","ast-disable-related-posts":"","theme-transparent-header-meta":"","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"default","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"ast-content-background-meta":{"desktop":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"footnotes":""},"categories":[25],"tags":[],"class_list":["post-182375","post","type-post","status-publish","format-standard","hentry","category-exams-certification"],"_links":{"self":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/posts\/182375","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/comments?post=182375"}],"version-history":[{"count":0,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/posts\/182375\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/media?parent=182375"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/categories?post=182375"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/tags?post=182375"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}