11-13-2010, 01:34 AM
The elasticity of supply measures the percentage change in the quantity supplied of a commodity as a result of percentage change in its price. It is a pure number and is positive because price and quantity move in the same direction. In general, percentage change in elasticity is used instead of absolute change in elasticity. The slope of supply is an unsatisfactory measure of the responsiveness in the quantity supplied of a commodity with respect to the change in its price but the concept of elasticity of supply has overcome this difficulty.
With reference to the above scenario, why is the slope of supply an unsatisfactory measure of the responsiveness in the quantity supplied of a commodity to a change in its price?
With reference to the above scenario, why is the slope of supply an unsatisfactory measure of the responsiveness in the quantity supplied of a commodity to a change in its price?