Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
The responsiveness of quantity supplied to a change in price
B
The relationship between supply and demand
C
The total revenue of a firm
D
The cost of production for goods
Understanding the Answer
Let's break down why this is correct
Answer
Price elasticity of supply measures how much the quantity of a product that suppliers are willing to sell changes when the price of that product changes. If the price goes up and suppliers can quickly produce more of the product, we say the supply is elastic. On the other hand, if suppliers cannot easily increase production when the price goes up, the supply is inelastic. For example, if a farmer can quickly grow more tomatoes when prices rise, the supply of tomatoes is elastic. Understanding this concept helps businesses and policymakers predict how changes in price will affect the availability of goods in the market.
Detailed Explanation
Price elasticity of supply shows how much the amount of a product changes when its price changes. Other options are incorrect because Some might think this measures how supply and demand work together; This option might confuse total revenue with how much supply changes.
Key Concepts
Price elasticity definition
Topic
Price Elasticity of Supply
Difficulty
easy level question
Cognitive Level
understand
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