Price Elasticity of Supply Measures Responsiveness

Steps:

• Recall the definition: Price elasticity of supply (PES) measures how much quantity supplied responds to a price change.
• Examine choices: Identify which option matches the standard economic formula for PES.
• Eliminate mismatches: Rule out options linking supply to demand or absolute changes.
• Confirm: Select the option using proportionate changes in supply relative to price.

Why D is correct:

• PES is defined as the percentage change in quantity supplied divided by the percentage change in price, directly matching option D.

Why the others are wrong:

• A: Describes absolute change, not the proportionate responsiveness central to elasticity.
• B: Confuses supply response with demand shifts, which is unrelated to PES.
• C: Incorrectly ties supply to demand changes instead of price.

Final answer: D