Price Elasticity of Supply Measures Responsiveness

Steps:

• Recall the definition: Price elasticity of supply (PES) measures how quantity supplied responds to price changes.
• Identify the core formula: PES = (% change in quantity supplied) / (% change in price).
• Evaluate options against formula: Look for proportionate changes in supply relative to price.
• Eliminate mismatches: Discard options involving demand or absolute changes.

Why D is correct:

• It matches the standard formula PES = (%Δ quantity supplied) / (%Δ price), focusing on proportional responsiveness to price.

Why the others are wrong:

• A: Describes absolute change, not proportionate elasticity.
• B: Involves demand, which relates to demand elasticity, not supply.
• C: Compares supply to demand changes, confusing supply and demand elasticities.

Final answer: D