1. What is Elasticity of Supply?

Elasticity of Supply measures how much the quantity supplied of a good responds to a change in the price of that good. It shows the degree of responsiveness of quantity supplied to a change in price.

2. How Does the Calculator Work?

The calculator uses the Elasticity of Supply formula:

Where:

• \( ES \) — Elasticity of Supply
• \( \%\Delta QS \) — Percentage change in quantity supplied
• \( \%\Delta P \) — Percentage change in price

Explanation: The elasticity coefficient is calculated by dividing the percentage change in quantity supplied by the percentage change in price.

3. Interpretation of Results

Details:

• ES > 1: Elastic supply (responsive to price changes)
• ES = 1: Unit elastic supply
• ES < 1: Inelastic supply (less responsive to price changes)
• ES = 0: Perfectly inelastic supply
• ES = ∞: Perfectly elastic supply

4. Using the Calculator

Tips: Enter the percentage change in quantity supplied and percentage change in price as percentages (without % sign). The price change cannot be zero.

5. Frequently Asked Questions (FAQ)

Q1: What factors affect supply elasticity?
A: Time period, availability of inputs, mobility of factors, and ability to store inventory all affect supply elasticity.

Q2: How is this different from price elasticity of demand?
A: Supply elasticity measures producer responsiveness, while demand elasticity measures consumer responsiveness to price changes.

Q3: What does a negative elasticity of supply mean?
A: Negative elasticity is rare but could occur if higher prices lead to reduced supply (e.g., labor supply at very high wages).

Q4: Why is supply typically more elastic in the long run?
A: Firms have more time to adjust production capacity, find new inputs, or enter/exit the market in the long run.

Q5: How is arc elasticity different from point elasticity?
A: Arc elasticity measures elasticity over a range, while point elasticity measures at a specific point on the supply curve.