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>> Hello, I'm Doctor Jose Vazquez, and now we're going to do the price elasticity of

supply. And the price elasticity of supply is

elasticity as any other. So remember that the elasticities is

always going to be the percent of change in one variable, let's say y, oh on the

percentage change in another variable, let's call that x.

And now we're just simply trying to figure out what is the percent of change on the

quantity supply, response as a percent of change in the quantity of the price, on

the price, right? So we're going to write it a price

elasticity of supply is going to be the percent of change in the quantity of x

supply, in response to a percent of change in the price of x.

So if the, since the supply curve is upwards sloping, right for a, for any

good, then the value of this elasticity here is going to be a positive number.

And, you know, the larger the number is the more elastic the, the supply is, and

the smaller the number is, the more price inelastic the supply is.

If you want to see it in the graph, and sometimes that helps kind of an inelastic

supply would be, in the extreme, would be fairly steep, like this.

And when your price changes from P1 to P2, your supply barely changes.

It's a very, it's kind of an inelastic supply.

And an elastic supply, a more elastic supply is going to be kind of flat.

Rise, so let's say, like that. So when you have a small change in the

price, from P1 to P2, you're going to have a large change in the supply, right?

So it's, you know, if, if, I dunno if you watched the video on demand before.

You didn't have to, but you can. If, if you watch the video on demand, this

should be pretty straight forward. The definition of, of price elasticity of

supply is the same as price elasticity of demand, it's just supply to supply.

But if you haven't seen the video on demand we're trying to basically measure

the rate of change of supply to a change in the price.

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