In microeconomics, the price elasticity of supply measures how strongly which variable responds to changes in another variable?

Introduction / Context:
Elasticity is a core concept in microeconomics. It captures how sensitive one economic variable is to changes in another. While students often learn about price elasticity of demand, the price elasticity of supply is equally important. This question specifically asks what the price elasticity of supply measures, so you must clearly distinguish between quantity supplied, quantity demanded, price, and cost.

Given Data / Assumptions:
- The concept being tested is price elasticity of supply. - We are asked which variable responds to changes in which other variable. - Options mention quantity supplied, quantity demanded, price, and average cost. - We assume standard textbook definitions of elasticity in microeconomics.

Concept / Approach:
Price elasticity of supply is defined as the percentage change in quantity supplied divided by the percentage change in price, holding other factors constant. In words, it measures how responsive producers are in adjusting the quantity they bring to market when the price of the good changes. It is therefore about quantity supplied reacting to price changes, not the other way around, and not about demand or costs.

Step-by-Step Solution:
Step 1: Recall the formula for price elasticity of supply: elasticity of supply = percentage change in quantity supplied / percentage change in price. Step 2: The structure of this formula shows that the dependent variable is quantity supplied and the independent variable is price. Step 3: Therefore, conceptually, the measure captures how quantity supplied responds when price increases or decreases. Step 4: Compare this with the options and look for the description that matches quantity supplied responding to price. Step 5: Option a states exactly that quantity supplied responds to changes in price, so option a is correct. Step 6: The other options involve reversed cause and effect or refer to demand and cost, which belong to other elasticity concepts.

Verification / Alternative check:
You can verify this interpretation by checking any standard microeconomics textbook, where elasticity of supply is always explained in terms of producer responsiveness. When price rises, a higher elasticity of supply means producers significantly increase quantity supplied; when elasticity is low, quantity supplied changes only slightly. This reinforces the direction of causality and the variables involved.

Why Other Options Are Wrong:
Option b suggests price responds to quantity supplied, which reverses the usual interpretation and does not match the formula for elasticity. Option c describes the concept of price elasticity of demand, not supply, because it focuses on quantity demanded. Option d refers to average cost responding to output, which relates to cost curves and economies of scale, not to price elasticity of supply. None of these reflect the correct definition.

Common Pitfalls:
A common pitfall is to mix up elasticity of demand and elasticity of supply, since both use similar formulas but with different quantities. Another mistake is to assume that elasticity can be defined with price in the numerator and quantity in the denominator, confusing cause and effect. Carefully remembering the formula and reading options word by word will help avoid these errors in examinations.

Final Answer:
Price elasticity of supply measures how quantity supplied responds to changes in price.