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    Elasticity of Supply. Types of Elasticity of Supply.: % Quantity Suppplied % Price %

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    Araoluwamide Bolarinwa
    This document discusses the concept of elasticity of supply and its various types: 1) Elastic supply occurs when a change in price leads to a greater change in quantity supplied. 2) Inelastic supply is when a large price change leads to a less than proportional change in quantity. 3) Unitary elastic supply means a price change causes an equal proportional change in quantity. Elasticity is measured as the percentage change in quantity divided by the percentage change in price.

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    Elasticity of Supply. Types of Elasticity of Supply.: % Quantity Suppplied % Price %

    Uploaded by

    Araoluwamide Bolarinwa
    29 views3 pages
    This document discusses the concept of elasticity of supply and its various types: 1) Elastic supply occurs when a change in price leads to a greater change in quantity supplied. 2) Inelastic supply is when a large price change leads to a less than proportional change in quantity. 3) Unitary elastic supply means a price change causes an equal proportional change in quantity. Elasticity is measured as the percentage change in quantity divided by the percentage change in price.

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    The elasticity ofsupply

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    This document discusses the concept of elasticity of supply and its various types: 1) Elastic supply occurs when a change in price leads to a greater change in quantity supplied. 2) Inelastic supply is when a large price change leads to a less than proportional change in quantity. 3) Unitary elastic supply means a price change causes an equal proportional change in quantity. Elasticity is measured as the percentage change in quantity divided by the percentage change in price.

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    © All Rights Reserved
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    Download as docx, pdf, or txt
    29 views3 pages

    Elasticity of Supply. Types of Elasticity of Supply.: % Quantity Suppplied % Price %

    Uploaded by

    Araoluwamide Bolarinwa
    This document discusses the concept of elasticity of supply and its various types: 1) Elastic supply occurs when a change in price leads to a greater change in quantity supplied. 2) Inelastic supply is when a large price change leads to a less than proportional change in quantity. 3) Unitary elastic supply means a price change causes an equal proportional change in quantity. Elasticity is measured as the percentage change in quantity divided by the percentage change in price.

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    You are on page 1of 3

    ELASTICITY OF SUPPLY.

    It is the degree of responsiveness of quantity supply to changes in price of such commodity.


    TYPES OF ELASTICITY OF SUPPLY.
    1. Elastic supply.
    2. Inelastic supply.
    3. Unitary elastic.
    4. Zero elastic or perfectly inelastic supply.
    5. Perfectly elastic or infinitely elastic.

    % ∆∈quantity suppplied
    It is given by where ∆ means change, and % is
    % ∆∈ price
    percentage.

    1. Elastic supply: This is when any change in price leads to a greater or more than
    proportionate change in quantity supplied. In this case, elasticity is greater one (1).

    Price
    S E>1
    Elastic supply

    Quantity supplied

    2. Inelastic supply: Supply is said to be inelastic if larger change in price leads to a less
    than proportionate change in the quantity of goods supplied. In this case, elasticity is less
    than one but greater than zero.

    Price
    S

    E<1
    Inelastic supply

    S
    Quantity supplied
    3. Unity or unitary elastic supply: This is when a change in price leads to an equal
    proportionate change in quantity supplied. In this case, elasticity is equal to one (1)

    Price S
    E=1
    Unitary elastic supply

    Quantity supplied

    4. Perfectly elastic supply or infinitely elastic supply: This is when a change in price
    brings about an infinite effect on the quantity supplied.

    Price
    E=
    Perfectly elastic or infinite
    elastic supply
    S

    Quantity supplied

    5. Perfectly inelastic supply or zero elastic supply: Supply is said to be perfectly


    inelastic if a change in price has no effect whatsoever on the quantity supplied.
    Price
    S E= 0
    Perfectly inelastic or zero
    elastic supply

    Quantity supplied

    MEASUREMENT OF ELASTICITY OF DEMAND OR THE CO-EFFICIENT OF


    PRICE ELASTICITY OF DEMAND
    % change∈quantity supplied
    Elasticity of supply is given by:
    % change∈ price .
    Example: If the price of a pencil increased from ₦10 to ₦15, while quantity offered for sale
    increased from 40 packets to 50 packets, calculate it elasticity or co-efficient of price
    elasticity.

    Change in price = ₦15 – ₦10 = ₦5


    5
    % change in price = × 100 = 50%
    10

    Change in quantity supplied = 50 packets – 40 packets = 10 packets


    % change in quantity supplied = 50 packets −¿ 40 packets = 10 packets
    10
    × 100 = 25%
    40
    % change∈qty suplied 25 %
    Elasticity = = = 0.5
    % change∈ Price 50 %

    Supply of pencil is inelastic because the change in price leads to lesser proportionate change
    in quantity supplied.

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