MJ Industries

Price elasticity of supply (PES) is a fundamental concept in economics that explains how the quantity of a good supplied changes in response to price fluctuations. This concept is vital for both businesses and economists to make informed decisions about production and pricing strategies. What is Price Elasticity of Supply? Price elasticity of supply measures the responsiveness of the quantity supplied of a good to a change in its price. When prices rise, suppliers generally increase the amount of goods they produce, and when prices fall, they reduce production. The degree to which they adjust their supply is what PES quantifies. Mathematically, PES is calculated as: P E S = %  change in quantity supplied %  change in price PES = \frac{\% \text{ change in quantity supplied}}{\% \text{ change in price}} ​ This equation tells us how sensitive the supply of a product is to changes in price. How to Calculate PES Using the Midpoint Method To accurately deter...