Degrees of Elasticity of Supply

Degrees of price elasticity of supply describe how the quantity supplied changes in response to price changes.

First is the perfectly elastic supply. A small price increase leads to an infinite quantity supplied, while a decrease drops it to zero. At the prevailing price, producers will supply any quantity. The supply curve is horizontal, and the elasticity is infinity.

Next is a relatively elastic supply. The percentage change in quantity supplied exceeds the percentage change in price. The supply curve is flatter, and the absolute value of elasticity is less than infinity but greater than one.

Then, there is a unitary elastic supply. The percentage change in quantity supplied equals the percentage change in price. The supply curve is diagonal, and the elasticity has an absolute value of one.

Next, relatively inelastic supply. The percentage change in quantity supplied is less than the percentage change in price. The supply curve is steeper. The absolute value of elasticity ranges from less than one to greater than zero.

Finally, the perfectly inelastic supply. The quantity supplied remains the same, regardless of price changes. The supply curve is vertical, and the elasticity is zero.