What confuses me in particular is that I always thought of the concept of ‘elasticity’ with respect to something. That is, supply of x can be elastic with respect to y.
Am I missing something?
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1$\begingroup$ In context of supply or demand, elasticity generally refers to price elasticity. So the statement is actually supposed to be: "price elasticity of supply is positive". So as price increases, quantity supplied increases. $\endgroup$– DayneDec 8, 2020 at 2:55
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Price elasticity of supply is: $\frac{dQ_s}{dp}\frac{p}{Q_s}$. Because supply slopes upward $\frac{dQ_s}{dp}>0$. $Q_s$ and $p$ are also positive so $\frac{dQ_s}{dp}\frac{p}{Q_s}>0$.
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$\begingroup$ May I ask: what is the purpose of the second ratio shown in the first and last sets. I'm referring to the p/q. Isn't elasticity simply dQ/dp? $\endgroup$ Dec 10, 2020 at 0:51
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$\begingroup$ @StatsScared no the elasticity is by definition $\frac{dQ_s/Q_s}{dp/p}$ as it is relative change in quantity over relative change in price but that can be rearranged to nicer looking formula: $\frac{dQ_s}{dp}\frac{p}{Q_s}$ $\endgroup$– WilliamTDec 15, 2020 at 18:55