price elasticity of supply

Price elasticity of supply measures how responsive the quantity of a good or service produced is to changes in its price. If a small price increase causes a large increase in production, the supply is considered elastic. Conversely, if production changes little with price changes, it is inelastic. Factors affecting this elasticity include the time period for adjustment, availability of resources, and ease of production scaling. Understanding this concept helps businesses and policymakers make informed decisions about pricing and supply strategies.