Types of Elasticity of Supply
1. Perfectly Elastic Supply: Price Elasticity of Supply is said to be perfect elastic supply when at a particular price, there is infinite supply for a commodity, and with even a small change in its price, the supply becomes zero. Perfectly Elastic Supply indicates that the suppliers are willing to sell only when the prices of commodities are high. The price elasticity in this case is infinite; i.e., ES = ∞.
2. More than Unit Elastic Supply/Relatively elastic supply: Price Elasticity of Supply is said to be more than unit elasticity when the percentage change in supply is relatively greater than the percentage change in price. The price elasticity of supply in such cases is greater than 1; i.e., ES > 1.
3. Unit Elastic Supply: Price Elasticity of Supply is said to be Unit Elastic Supply when a price change is exactly equal to the change in quantity supplied. The price elasticity of supply is 1 in such cases; i.e., ES = 1.
4. Less than Unit Elastic Supply/Relatively Inelastic Supply: Price Elasticity of Supply is said to be less than unit elastic supply when the percentage change in supply is relatively lower than the percentage change in price. Price Elasticity of Supply is less than 1 in such cases; i.e., ES < 1.
5. Perfectly Inelastic Supply: Price Elasticity of Supply is said to be perfect inelastic supply when the quantity supplied does not change with the change in price. It shows that the supply would remain the same irrespective of the price. The price elasticity in this case is zero; i.e., ES = 0.
Price Elasticity of Supply : Type, Determinants and Methods
The Law of Supply states that, with other factors being constant, the quantity supplied increases with a price increase and decreases with a decrease in the price of the commodity. The degree of change in quantity supplied in response to changes in price is known as Price Elasticity of Supply. Price Elasticity of supply undertakes how the supply of a particular product responds to price fluctuations. The degree of change in supply due to changes in price is depicted by calculating the Price Elasticity of Supply.