The quantity supplied changes in reaction to a change in price, and this is measured by the price elasticity of supply.
The calculations and interpretations are similar to those for the price elasticity of demand that we previously described. The only distinction is that we are focusing on producers' reactions to a price shift rather than customers' reactions. The quantity of a good or service supplied divided by the price change as a percentage represents price elasticity of supply. The law of supply applies because this elasticity is measured along the supply curve, so price elasticities of supply are always positive numbers. The point elasticity approach and the mid-point elasticity approach are the two methods for calculating elasticities, in case you forgot.
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