Which best describes what the elasticity of supply measures?

Which best describes what the elasticity of supply measures?

• A. Supply to changes in costs.
• B. Quantity supplied to a change in price.
• C. Price to changes in supply.
• D. Quantity supplied to quantity demanded.

Answer: (B)

The main concept here is how responsive sellers are to price changes. Elasticity of supply measures how much the quantity supplied changes when the market price changes, expressed as the percentage change in quantity supplied divided by the percentage change in price. This tells us how sensitive producers are to price moves—high elasticity means big adjustments in quantity, while low elasticity means only small adjustments. This focus on the relationship between quantity supplied and price, rather than costs, or the relationship between price and supply in the wrong direction, or the interaction between quantity supplied and quantity demanded, is why the description “quantity supplied to a change in price” best captures what elasticity of supply measures.

The main concept here is how responsive sellers are to price changes. Elasticity of supply measures how much the quantity supplied changes when the market price changes, expressed as the percentage change in quantity supplied divided by the percentage change in price. This tells us how sensitive producers are to price moves—high elasticity means big adjustments in quantity, while low elasticity means only small adjustments.

This focus on the relationship between quantity supplied and price, rather than costs, or the relationship between price and supply in the wrong direction, or the interaction between quantity supplied and quantity demanded, is why the description “quantity supplied to a change in price” best captures what elasticity of supply measures.