The elasticity of supply Concept Introduction: Price Elasticity of supply – If for a one unit change in the price(ΔP), the supply increases more than proportionately the supply is said to be elastic. If however, the responsive change in supply (ΔQ) is less than proportionate the supply is said to be inelastic while it is said to be unit elasticity if the percentage change in supply is equal to the percentage change in price. If elasticity is ‘e’ then it is defined as: e = %Δ Q %Δ P If e > 1, the supply is elastic e < 1, the supply is inelastic e = 1, the supply is unit elastic e → ∞, the supply is perfectly elastic e = 0, the supply is perfectly inelastic

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Chapter 19, Problem 19.3SC

To determine

The elasticity of supply

Concept Introduction:

Price Elasticity of supply– If for a one unit change in the price(ΔP), the supply increases more than proportionately the supply is said to be elastic. If however, the responsive change in supply (ΔQ) is less than proportionate the supply is said to be inelastic while it is said to be unit elasticity if the percentage change in supply is equal to the percentage change in price. If elasticity is ‘e’ then it is defined as:

e=%ΔQ%ΔP

If e > 1, the supply is elastic

e < 1, the supply is inelastic

e = 1, the supply is unit elastic

e → ∞, the supply is perfectly elastic

e = 0, the supply is perfectly inelastic

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