The coefficient of the price elasticity of supply is always_____________

Analyze the question The question asks about the sign of the coefficient of price elasticity of supply (PES).

Explain the concept Price elasticity of supply measures how much the quantity supplied responds to a change in price:

PES = (% change in quantity supplied) ÷ (% change in price)

Show the solution

• The law of supply says that when price rises, quantity supplied rises, and when price falls, quantity supplied falls.
• Price and quantity supplied move in the same direction, so both percentage changes have the same sign.
• A positive divided by a positive (or a negative divided by a negative) gives a positive number.

Let's check each option:

• A. Constant: No. PES varies from one supply curve to another, and even along the same curve.
• B. Zero: No. Zero applies only to perfectly inelastic supply, which is a special case.
• C. Positive: Yes. For a normal upward-sloping supply curve, PES is always greater than zero.
• D. Negative: No. Negative values belong to price elasticity of demand, because price and quantity demanded move in opposite directions.

Answer: C. Positive

Exam tip: Remember "Supply = Same direction = Positive". Demand elasticity is negative, though textbooks usually ignore the sign and quote the absolute value. Supply elasticity is positive.