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If quantity supplied increases 20% when price increases 10%, price elasticity of supply is.

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How sensitive the supply quantity is to a shift in price is quantified by the concept of price elasticity of supply. Quantity supplied (Q.S) elasticity of supply (PES) is calculated as the ratio of price change to the percentage change in Q.S. Supposing that supply doubles while demand grows by 10%, the new price of a cappuccino will be $1.30. We define PES as 2.0.

What is Price elasticity?

Generally, a method for determining how much of an impact a change in either supply or pricing has on demand.

In conclusion, If supply increases by 100% and demand rises by 10%, the cost of a cappuccino will rise to $1.30. Specifically, we say that PES 2.0 is the standard for it.

Read more about Price elasticity

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