The below given is the Price elasticity of supply tutorial which provides you the formula and definition for price elasticity of supply. Also, its calculation is explained in the step by step manner through an example problem. It helps you in getting an overall idea of the concept.

Price Elasticity of Supply Tutorial

Price Elasticity of Supply
Definition:

         Price elasticity of supply (PES) is used to measure the sensitiveness of the supply of a goods or service to changes in its price.

Formula:

Change in Quantity(%) = ((New Quantity - Original Quantity) / Original Quantity) × 100 Change in Price(%) = ((New Price - Original Price) / Original Price Price Elasticity Of Supply(PES %) = ((Change in Quantity / Change in Price) × 100
Example:

Find the Price elasticity of supply, with the new quantity value of 24, original quantity value of 23, new price value of 1600, and original price value of 1500.

Solution: Step: 1 : Find the Change in Quantity Change in Quantity = ((24 - 23) / 23) × 100 = 4.34782608695652%
Step: 2 : Find the Change in Price Change in Price = ((1600 - 1500) / 1500) × 100 = 6.66666666666667%
Step: 3 : Find the Price Elasticity of Supply Price Elasticity of Supply(PES) = 4.34782608695652 / 6.66666666666667 = 0.652 × 100 = 65.21%

Hence, the Price Elasticity of Supply is 65.21%.


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