To determine if the supply is elastic or inelastic, you look at the percentage change in quantity supplied compared to the

percentage change in price.

1. Elastic Supply:
- If the percentage change in quantity supplied is greater than the percentage change in price, the supply is elastic.
- For example, if the price of oranges increases by 10% and the quantity supplied of oranges increases by 20%, the supply is
elastic because the quantity supplied responds proportionally more than the price change.

2. Inelastic Supply:
- If the percentage change in quantity supplied is less than the percentage change in price, the supply is inelastic.
- For example, if the price of insulin increases by 10% and the quantity supplied increases by only 5%, the supply is inelastic
because the quantity supplied responds proportionally less than the price change.

In summary, elasticity of supply depends on how much the quantity supplied changes in response to a change in price. If the
change in quantity supplied is relatively large compared to the change in price, supply is elastic. If the change in quantity supplied
is relatively small compared to the change in price, supply is inelastic.
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To solve for the elasticity of supply, you can use the formula:

Elasticity of Supply = (% Change in Quantity Supplied) / (% Change in Price)

Here are the steps to solve for the elasticity of supply:

1. Calculate the percentage change in quantity supplied:

- Subtract the initial quantity supplied from the new quantity supplied.
- Then, divide the result by the average of the initial and new quantity supplied.
- Finally, multiply the result by 100 to express it as a percentage.

Percentage Change in Quantity Supplied = ((Q2 - Q1) / ((Q1 + Q2) / 2)) * 100

2. Calculate the percentage change in price:

- Subtract the initial price from the new price.
- Then, divide the result by the average of the initial and new price.
- Finally, multiply the result by 100 to express it as a percentage.

Percentage Change in Price = ((P2 - P1) / ((P1 + P2) / 2)) * 100

3. Use the values obtained in steps 1 and 2 to calculate the elasticity of supply using the formula mentioned earlier:

Elasticity of Supply = (% Change in Quantity Supplied) / (% Change in Price)

4. Interpret the result:
- If the elasticity of supply is greater than 1, the supply is elastic.
- If the elasticity of supply is less than 1, the supply is inelastic.
- If the elasticity of supply is equal to 1, the supply is unit elastic.

Remember to use absolute values when calculating percentage changes to ensure that the elasticity is always positive.
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The concept of elasticity applies to both supply and demand, but they measure different aspects of how quantity responds to
changes in price.

Elasticity of demand measures the responsiveness of quantity demanded to changes in price, while elasticity of supply measures
the responsiveness of quantity supplied to changes in price.

Here are the key differences:

1. **Elasticity of Demand:**
- Measures how much the quantity demanded of a good or service changes in response to a change in its price.
- If the elasticity of demand is greater than 1, demand is elastic. This means that a percentage change in price leads to a larger
percentage change in quantity demanded.
- If the elasticity of demand is less than 1, demand is inelastic. This means that a percentage change in price leads to a smaller
percentage change in quantity demanded.
- If the elasticity of demand is equal to 1, demand is unit elastic. This means that a percentage change in price leads to an equal
percentage change in quantity demanded.

2. **Elasticity of Supply:**
- Measures how much the quantity supplied of a good or service changes in response to a change in its price.
- If the elasticity of supply is greater than 1, supply is elastic. This means that a percentage change in price leads to a larger
percentage change in quantity supplied.
- If the elasticity of supply is less than 1, supply is inelastic. This means that a percentage change in price leads to a smaller
percentage change in quantity supplied.
- If the elasticity of supply is equal to 1, supply is unit elastic. This means that a percentage change in price leads to an equal
percentage change in quantity supplied.

In summary, while both elasticity of demand and elasticity of supply measure responsiveness to changes in price, elasticity of
demand focuses on the buyers' behavior (quantity demanded) and elasticity of supply focuses on the sellers' behavior (quantity
supplied).

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