Topic: Elasticity of supply
Elasticity of supply may be defined as the degree of responsiveness of the quantity supplied of a commodity to change
in the price of commodity.
Type of elasticity of supply
goods supplied. In this case elasticity is greater than one or unity. i.e. E= > 1. this type of elasticity is also
1. Elastic supply: This is said to be elastic if a small change in price leads to a greater change in the quantity of
known as fairly elastic supply.
�> 1 < 𝐼𝑛𝑓𝑖𝑛𝑖𝑡
S
� 𝑦
P2
Price
P1
S
Q1 Q2 Quantity supplied
Elastic or fairly elastic supply curve
2. Inelastic supply: this is said to be inelastic if a large change in price leads to a smaller slight change in the
quantity of goods supplied. In this case elasticity is less than one but greater than zero i.e. E<1
1. 𝑇ℎ𝑖𝑠 𝑡𝑦𝑝𝑒𝑠 𝑜𝑓 𝑒𝑙𝑎𝑠𝑡𝑖𝑐𝑖𝑡𝑦 𝑐𝑎𝑛 𝑏𝑒 𝑎𝑙𝑠𝑜 𝑏𝑒 𝑑𝑒𝑠𝑐𝑟𝑖𝑏𝑒𝑑 𝑎𝑠 𝑓𝑎𝑖𝑟𝑙𝑦 𝑖𝑛𝑒𝑙𝑎𝑠𝑡𝑖𝑐 𝑠𝑢𝑝𝑝𝑙𝑦
�< 0 < 1
S
�
P2
Price
P1
Q1 Q2 Quantity supplied
Inelastic or fairly inelastic supply curve
3. Unity or unitary elastic supply: supply is said to be unitary when a change in price leads to an equal change in
situation elasticity is equal to one. i.e. 𝐸 = 1
the quantity of goods supplied. In other words a 5% change in price will lead to a 5% change in supply. In this
�= 1
S
P2 �
Price
P1
0
Q1 Q2 Quantity supplied
Unitary elastic supply curve
4. Perfect elastic supply or infinitely elastic supply: supply is said to be perfectly elastic when a change in price
brings about an infinite effect on the quantity of goods supplied. In other words, slight increase in price can
make producers to increase the supply of the commodity while a slight decrease in price will make producers
to stop the supply of the commodity. In this case, elasticity is equal to infinity.
� = 𝐼𝑛𝑓𝑖𝑛𝑖𝑡𝑦
�
PS
Price
Quantity supplied
Infinity or perfectly elastic supply curve
5. Perfectly inelastic supply or zero elastic supply: Supply is said to be perfectly inelastic if a change in price has
no effect whatsoever in the quantity of goods supplied. In this case,
elasticity is equal to zero S 𝐸=0
Price
0
Q1 Quantity supplied
Zero or perfectly inelastic supply
curve
