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.