We know from the Law of Supply that desired quantity supplied and market price move in the same direction. Increases in price lead to increases in quantity supplied, and vice versa. This means that the own price elasticity of supply, , must always be positive.
The expression to the left is the general version of supply elasticity
measure. By now, you should see how to create any elasticity measure
you wish. In this case, supply elasticity is the ratio of percentage
change in desired quantity supplied to the percentage change in market price, and is always positive.
Copyright © 1995-2004 OnLineTexts.com, Inc. - All Rights Reserved