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Question
Identify and define the degree of price elasticity of supply from the diagram for the supply curves S1, S2, S3, S4.
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Solution
The supply curves S1, S2, S3, and S4 exhibit various types of price elasticity of supply, which are as follows: The S1 - OS1 supply curve demonstrates Unitary Elastic Supply since the change in the amount supplied is proportional to the change in price. Symbolically, it is expressed as Es = 1.
The S2 - OS2 supply curve demonstrates More Elastic Supply because a little change in price causes a significant change in quantity delivered. Symbolically, it is expressed as Es > 1.
The S3 - OS3 supply curve demonstrates Perfectly Inelastic Supply, which means that a change in price causes no change in supply. Symbolically, it is expressed as Es = 0.
The S4 - OS4 supply curve demonstrates Less Elastic Supply since a change in price results in a modest change in supply. Symbolically, it is expressed as Es < 1.
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