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**

- 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.
- 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.
- 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.
- 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.
- 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.

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

**Join Discussion Forum and do your assignment**: Find questions at the end of each lesson, Click here to discuss your answers in the forum

**Ad: Get a FREE Bible**:
Find true peace. Click here to learn how you can get a FREE Bible.

**For advert placement/partnership, write [email protected]**

**Download our free Android Mobile application**:
Save your data when you use our free app. Click picture to download. No subscription.

**Tell your friends about Stoplearn.com. Click the share button below!**