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# Elasticity of supply

Elasticity of supply measures the degree of responsiveness of the quantity of a commodity offered for sale to a little change in the price of that commodity or to a change in the cost of production.

Types of Elasticity of Supply

1. Elastic Supply: Supply is elastic if a little change in the price of a commodity or cost of production brings about a more than proportional change in the quantity supplied. 2. Inelastic Supply: Supply is inelastic if a little change in the price or the cost of production brings about a less than the proportional change in the quantity of the commodity supplied. 3. Unitary Elastic Supply: Elasticity of supply is unitary (or unity) if a change in price or cost of production brings about a proportional change in the quantity of the commodity sold. 4. Perfectly Elastic supply or Infinitely Elastic Supply: a little increase in the price of the commodity would result in the supply of all the stock of that commodity available and vice versa. 5. Perfectly Inelastic Supply: This indicates that changes in price do not bring any change in the quantity supplied. ## Measurement of Elasticity of Supply

The elasticity of supply can be determined or measured by calculating the co-efficient of the elasticity of supply.

The elasticity of supply can be determined or measured by calculating the co-efficient of the elasticity of supply.
Co-efficient of price elasticity of supply = (% chage in Quantity Supplied)/(% change in price) Negative signs are ignored.

Example

Price (N) Quantity supplied
4 10
6 12

Calculate co-efficient of elasticity of supply
What type of supply is this
How do you know
Solution

Change in quantity supplied

## MEASUREMENT OF ELASTICITY OF DEMAND

Elasticity of demand can be measured or determined by calculating the elasticity of demand co-efficient. The co-efficient of elasticity of demand can be calculated using the following formulae.

1. Co – efficient of price elasticity demand = %change in quantity demand /% change in price.
2. C o-efficient of income elasticity of demand = %change in quantity demand /% change in income.
3. Co-efficient of cross elasticity of demand = %change in quantity of commodity X demanded /% change in price of commodity.

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