Answer to Question #294014 in Economics for Hamid

Question

Explain how an economist can determine whether the supply of a product is elastic or inelastic

Answer 1

The price elasticity of supply = % change in quantity supplied / % change in price. When calculating the price elasticity of supply, economists determine whether the quantity supplied of a good is elastic or inelastic.

PES > 1: Supply is elastic.

PES < 1: Supply is inelastic.