Solved in Minutes - Economics - Price Elasticity of Supply

04/04/20244 minute read
Solved in Minutes - Economics - Price Elasticity of Supply

Explore our exciting new series, "Solved in Minutes"! This mini-series aims to dive deep into specific academic subjects, tackling common or complex problems students face. Each episode, crafted by our expert teachers, is designed to be educational, practical, and engaging. Whether you're a current student interested in enhancing your understanding or a prospective learner curious about CGA’s subject offerings, or looking to get an inside peek of our teachers at work, this series is for you.

In our very first episode, we explore the intriguing world of economics with a focus on the 'Price Elasticity of Supply.' CGA, Commerce Teacher Amelia Mckenzie breaks down this fundamental concept, essential for understanding the dynamics of supply in the market. Through a quick explanation, Amelia makes this economic principle accessible to students, ensuring they can easily grasp the essentials of how changes in price affect the quantity supplied of a product.

What is 'Price Elasticity of Supply'?

Understanding the 'Price Elasticity of Supply' is crucial for anyone looking to comprehend how economic forces shape market outcomes. This concept measures the responsiveness of quantity supplied to a change in price. In simpler terms, it examines how much the quantity supplied of a product changes when its price does.

Amelia uses the example of tomatoes to illustrate this principle in action. If the price of tomatoes increases by 20%, leading to an increase in quantity supplied from 20,000 to 22,000, what does this tell us about the price elasticity of supply? Through a step-by-step explanation and employing the percentage change formula, Amelia reveals how to calculate this elasticity, providing insights into whether the supply of tomatoes is elastic, inelastic, or unitary elastic.

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Why this matters

Businesses, economists, and policymakers use this knowledge to make informed decisions about production, pricing, and policy-making. For students, these concepts can help in understanding how economic principles operate in everyday life. Such as:

  • Understanding supply and price elasticity can help in making more informed decisions about purchases and savings. For instance, anticipating when prices of goods might increase or decrease can guide when to buy or save.
  • For those interested in starting their own businesses, knowing how supply changes with price can inform product pricing strategies and inventory management to maximize profitability.

Ready to dive into the economics of it all?

Join CGA Teacher Amelia in her "Solved in Minutes" series. Stay tuned for more episodes as we unravel the mysteries of different subjects. Because after all, mastering any subject can be achievable with the right guidance.