Question

Explain various types of Price Elasticity of Supply. (Answer in detail)

Answer 1

Perfectly Inelastic Supply : When the supply does not change with change in price, then supply for such a commodity is said to be perfectly inelastic.
In such a case, Es = 0 and the supply curve (SS) is a vertical straight line parallel to the Y-axis. 

Relatively Inelastic Supply : means that relatively large changes in price cause relatively small changes in quantity. In other words, quantity is not very responsive to price. More specifically, the percentage change in quantity is less than the percentage change in price.

Unit Elastic Supply : When percentage change in quantity supplied is equal to percentage change in price, then supply for such a commodity is said to the unitary elastic. In such a case, Es = 1 and supply curve is a straight line passing through the origin.

Relatively Elastic Supply : A relative elasticity of supply is expressed with a flat but not horizontal curve which starts from Y-axis. It is always greater than one and is denoted with value Es>1. It means the percentage change in quantity is greater than the percentage change in price. In other words, a small difference in price can bring a significant shift in supply.

Perfectly Elastic Supply : When there is an infinite supply at a particular price and the supply becomes zero with a slight fall in price, then the supply of such a commodity is said to be perfectly elastic. In such a case Es = ∞ and the supply curve is a c horizontal straight line parallel to the X-axis.




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Answer 2

Various types of Price Elasticity of Supply are -

• Relatively inelastic - Relatively large price changes cause relatively small quantity changes. The quantity does not respond to the price very well. In particular, the percentage change in quantity is lower than the change in price percentage.
• Perfectly inelastic ( Es = 0) - If the supply does not change with price change, then supply is said to be perfectly inelastic for such a commodity. Here the supply curve is always a vertical straight line.
• Unitary Elastic ( Es = 1) - If the percentage change in the amount sold is equal to the percentage change in price, the unitary elastic will be told to supply such a product. A straight line is formed passing through the origin and supply curve.
• Relatively Elastic ( Es>1 ) - A relative supply elasticity is expressed through a flat but not horizontal curve starting from the Y-axis. This indicates that the amount change percentage is higher than the price change percentage. In other words, a small price gap will bring about a significant supply change.