What does Price Elasticity of Supply (PES) measure?

Price Elasticity of Supply (PES) measures the responsiveness of the quantity supplied of a good or service to a change in its price. When the price of a good increases, suppliers are typically willing to produce and sell more of that good, and PES quantifies how much quantity supplied changes in response to this price change. A higher PES indicates that suppliers can easily adjust production levels when prices change, while a lower PES suggests that quantity supplied is less responsive to price changes. Understanding this concept is essential for analyzing market behaviors and government policies regarding taxes, subsidies, and price controls.

The other choices do not accurately describe PES. The first choice focuses on income and changes in quantity supplied associated with that, which relates to income elasticity rather than price elasticity. The third choice deals with demand rather than supply, while the fourth talks about production costs, which impacts overall supply but does not address the relationship between quantity supplied and price directly.