Final answer:
The price elasticity of supply measures how responsive the quantity supplied of a good is to changes in its price. It is calculated as the percentage change in quantity divided by the percentage change in price.
Step-by-step explanation:
The price elasticity of supply measures how responsive the quantity supplied of a good is to changes in its price. It is calculated as the percentage change in quantity divided by the percentage change in price. Elasticity can be described as elastic, unit elastic, or inelastic, depending on the magnitude of the percentage change in quantity to the percentage change in price.
For example, if the price elasticity of supply for a particular good is 2, it means that a 1% increase in price will result in a 2% increase in quantity supplied. On the other hand, if the price elasticity of supply is 0.5, a 1% increase in price will only result in a 0.5% increase in quantity supplied.