Elasticity of supply may be defined as the degree of responsiveness of the quantity supplied of a commodity to change in its price.

Under geometric method, the elasticity of supply is measured at a point on the supply curve. To explain this method, let us draw three straight line supply curves.

To measure elasticity of supply at a point, we extend the supply curve so that its meets the x-axis at point B in its negative range, positive range and exactly at the point of origin. Elasticity of supply at a point (say A) is equal to the horizontal segment BC divided by the quantity supplied at point A. Thus,

\({ e }_{ s\quad }=\quad { BC }/{ OC }\)

In Fig. (i), \({ e }_{ s }=\frac { BC }{ OC } >1\) \(\left[ \because \quad BC\quad >\quad OC \right] \)

In Fig, (ii), \({ e }_{ s }=\frac { BC }{ OC } <1\) \(\left[ \because \quad BC\quad <\quad OC \right] \)

In Fig, (iii), \({ e }_{ s }=\frac { OC }{ OC } =1\) \(\left[ \because \quad BC\quad =\quad OC \right] \)

Thus, it can be concluded that:

a straight line supply curve which intersects the x-axis in its negative range implies e_s > 1

a straight line supply curve which intersects the x-axis in its positive range implies e_s < 1.

a straight line supply curve passing the origin implies e_s = 1irrespective of how steep or flat it is.

Under percentage method, elasticity of supply is measured by dividing the percentage change in quantity supplied of a commodity by percentage change in its price.

\({ e }_{ s }=\frac { Percentage\quad change\quad in\quad quantity\quad supplied }{ Percentage\quad change\quad in\quad price } \)

\(=\frac { \triangle { q }/{ p\quad }\times \quad 100 }{ \triangle { p }/{ q\quad \times \quad 100\quad } } =\frac { \triangle { q }_{ s } }{ \triangle { p } } .\frac { p }{ { q }_{ s } } \)

\(\therefore\) \({ e }_{ s }=\frac { \triangle { q }_{ s } }{ \triangle { p } } .\frac { p }{ { q }_{ s } } \)

Example.

p	q
10	100
20	200

\({ e }_{ s }=\frac { \triangle { q }_{ s } }{ \triangle { p } } \times \frac { p }{ { q }_{ s } } =\frac { 100 }{ 10 } \times \frac { 10 }{ 100 } =1\)

Thus, \({ e }_{ s }\) is unity of 1.