Final answer:
The price elasticity of supply is calculated by dividing the percentage change in quantity supplied by the percentage change in price. It indicates how responsive the market is to price changes.
Step-by-step explanation:
The formula for measuring the price elasticity of supply is the percentage change in quantity supplied divided by the percentage change in price. This measures how much the quantity supplied of a good or service is expected to change when its price changes. Price elasticity of supply is an important concept in economics that helps understand the responsiveness of the market to changes in prices. Elastic, inelastic, and unitary are the terms used to describe the extent of responsiveness.
To calculate the price elasticity of supply, you can use the formula:
Price Elasticity of Supply = Percentage Change in Quantity Supplied / Percentage Change in Price