Give reasons or explain:
v. With a slight change in the price, if supply varies in a greater proportion than supply is said to be relatively elastic.
ANSWER:
When the supply of a good is highly responsive to the changes in its price, the supply of that good is said to be relatively elastic. In other words, with a slight change in the price, if supply varies in a greater proportion, the supply is said to be relatively elastic. In this case, the percentage change in the supply is greater than the percentage change in the price. Hence, the value of price elasticity of supply is greater than one i.e. Es > 1.
