Economics Grade 10 Unit Two 2.4.2 Elasticity of Supply

Elasticity of supply Price elasticity of supply measures the degree of responsiveness or reaction of producers to price changes. The greater the reaction, the greater the elasticity. The lesser the reaction, the smaller the elasticity. If the price of coffee rises, for example, producers may be tempted to sell more in the market and keep less in stock. Formally, the price elasticity of supply ( ) is the percentage change in quantity supplied divided by the percentage change in price of the commodity. That is