Ea via de percentagemethode

The price elasticity of supply measures how responsive the quantity supplied of a good or service is to changes in price.

The percentage method is a way to measure this elasticity. It is calculated by taking the ratio of the percentage change in quantity supplied to the percentage change in price.

For example, if a toy car sells for $10, the factory produces 1000 cars. If the price increases to $12, the factory may increase production to 1200 cars.

Then, the percentage change in quantity supplied is calculated from the change in quantity and is equal to 20 percent.

Similarly, the percentage change in price is calculated from price change and equals 20 percent.

The ratio of these quantities gives the elasticity which is equal to one.

Unitary elasticity represents that the percentage change in quantity supplied is precisely equal to the percentage change in price.