Final answer:
Price elasticity of demand measures the responsiveness of quantity demanded to price changes, while price elasticity of supply measures the responsiveness of quantity supplied to price changes.
Step-by-step explanation:
Price Elasticity of Demand
Price elasticity of demand measures the responsiveness of the quantity demanded of a good or service to changes in its price. It is calculated as the percentage change in quantity demanded divided by the percentage change in price. If the price elasticity of demand is greater than 1, the good or service is considered elastic, meaning that a small change in price leads to a proportionately larger change in quantity demanded. If the price elasticity of demand is less than 1, the good or service is considered inelastic, meaning that a change in price has a smaller effect on quantity demanded.
Price Elasticity of Supply
Price elasticity of supply measures the responsiveness of the quantity supplied of a good or service to changes in its price. It is calculated as the percentage change in quantity supplied divided by the percentage change in price. If the price elasticity of supply is greater than 1, the good or service is considered elastic, meaning that a small change in price leads to a proportionately larger change in quantity supplied. If the price elasticity of supply is less than 1, the good or service is considered inelastic, meaning that a change in price has a smaller effect on quantity supplied.