posted by Laura on .
How is elasticity of supply related to elasticity of demand? Is this correct?
I know that the terms supply and demand refer to the behavior of people as they interact with one another in markets. Buyers determine demand and sellers determine supply. Just as we can measure how responsive buyers are to a change in price, we can measure how responsive sellers are. This measurement, the price elasticity of supply, has the same formula as price elasticity of demand.
The demand curve is amount bought vs price. The supply surve is amount produced vs. price. The formulas for the two curves are NOT the same. The two curves intersect at the equilibrium price.