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Price Elasticity of Supply definitions

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Terms in this set (14)

  • Price Elasticity of Supply
    Measures how much quantity supplied changes in response to a change in price, always yielding a positive value due to the law of supply.
  • Law of Supply
    States that as price increases, quantity supplied also increases, ensuring a positive relationship between price and supply.
  • Midpoint Method
    A calculation technique using averages to determine percentage changes, minimizing bias from starting values.
  • Quantity Supplied
    The amount of a good producers are willing to offer for sale at a specific price.
  • Percentage Change
    A measure comparing the difference between two values to their average, used to assess changes in supply and price.
  • Elastic Supply
    Occurs when the price elasticity of supply is greater than 1, indicating quantity supplied changes more than price.
  • Inelastic Supply
    Occurs when the price elasticity of supply is less than 1, indicating quantity supplied changes less than price.
  • Unit Elastic Supply
    Occurs when the price elasticity of supply equals 1, meaning quantity supplied changes exactly in proportion to price.
  • Numerator
    The top part of the price elasticity of supply formula, representing percentage change in quantity supplied.
  • Denominator
    The bottom part of the price elasticity of supply formula, representing percentage change in price.
  • Supply Curve
    A graphical representation showing the relationship between price and quantity supplied.
  • Formula
    A mathematical expression used to calculate price elasticity of supply, involving percentage changes in supply and price.
  • Average
    The sum of two values divided by two, used in the midpoint method to calculate percentage changes.
  • Classification
    A system for categorizing supply elasticity as elastic, inelastic, or unit elastic based on calculated values.