1. Elasticity of Supply
Unit 2

2. Elasticity of Supply
How responsive the change in quantity supplied is when there is change in price

3. Equation: Elasticity of Supply
% Change in Quantity Supplied
% Change in Price

4. Elastic Supply
Significant change in quantity supplied with change in price
When Elasticity is >1

5. 20% change in quantity supplied
Elastic Demand
10% change in price
20% change in quantity supplied
= 2

6. Elastic Supply
Price
Quantity S
Not steep

7. Elastic Supply Examples
Products that can be made:
Quickly
Cheaply
With a few, readily available resources

8. Inelastic Supply
Minimal change in quantity supplied with change in price
When Elasticity is <1

9. Inelastic Demand = .5 10% change in quantity supplied
20% change in quantity price
10% change in quantity supplied
= .5

10. Inelastic Supply
Price
Quantity S
Very Steep

11. Inelastic Supply Examples
Production of these G&S take a lot of:
Time
Money
Resources that are not readily available

12. Perfectly Inelastic Supply
NO change in quantity supplied with a change in price
Quantity supplied cannot be increased

13. Perfectly Inelastic Supply
Price
Quantity S
Qty supplied will never change…unless you shift the curve

14. Unitary Elastic % Change in Quantity Supplied = % Change in Price
Elasticity = 1