Elasticity of supply of a commodity is the degree of responsiveness of the quantity supplies to changes in price. Like the elasticity of demand, the elasticity of supply is the relative measure of the responsiveness of quantity supplied of a commodity to a change in its price.
The, greater the responsiveness of quantity supplied of a commodity to the change in its price, the greater is its elasticity of supply. To be more precise, the elasticity of supply is defined as a percentage change in the quantity supplied of a product divided by the percentage change in price.
Kinds of Elasticity of Supply:
There are five types of elasticity of supply which are given below
(I) perfectly elastic supply:
It is a case where a very slight change in price causes an Infinite change in supply. A slight fall in prices brings quantity supplied to zero. In such a case the supply curve runs parallel to X -axis. The supply curve takes the shape of a horizontal straight lit line. In the diagram given below 'SS' is the supply curve which shows that an infinitesimally small change in price causes an infinitely large change in the quantity supplied.
(2) Perfectly inelastic supply:
The supply of a commodity is said to be perfectly inelastic when the supply of commodity is completely non-responsive to changes in price. It is a case where quantity supplied remains the same despite the change in price. A perfectly inelastic supply curve is a vertical straight line which is parallel to OY-axis. In the diagram given below 'SS' is the perfectly inelastic supply curve that runs parallel to OY-axis.
(3) Relatively elastic supply:
The supply is relatively elastic when a given change in price produces more than proportionate change in quantity supplied. A doubling in price will result in more than double the quantity supplied. In the diagram shown below, a given change in price from OP to OP, is attended by a much more change in supply, supply curve 'SS' is relatively
(4) Relatively inelastic supply:
When a certain change in price causes a smaller proportionate change in quantity supplied of a Commodity, the supply is said to be relatively less elastic. The percentage change in price is more than the percentage change in quantity supplied. In the diagram as shown, below a rise in price from OP, to OP brings about less than proportionate change in supply from OS, to OS. Hence the supply curve SS is relatively inelastic.
(5) Unitary elastic supply:
In such a situation the proportionate change in supply equals the proportionate change in price. In the diagram given below SS is the unitary elastic supply curve. Increase in price from OP to OP is accompanied by a proportionate change in supply from OS to OS.