Elasticity of Supply

The elasticity of supply measures the degree of responsiveness of quantities supplied to the changes in the price of a commodity. The elasticity of supply is the ratio between percentage change in quantity supplied and a percentage change in price.

Fig: Equation of elasticity of supply

Suppose the price of a mango rises from Re.1 to Rs.1.50 and as a result, the supply rises from 10 to 20 mangoes, then the elasticity of supply is estimated as follows:

Fig: Numerical

It could be inferred from the result that there is a two percent increase in the quantity of mango supplied if its price increases by one percent.