Graphical Representation of Price Elasticity of Supply and Five Elasticity Alternatives of Supply Curve

By Bharat Choudhary -
What is Supply Curve?

supply curve, in economics, graphic representation of the relationship between product price and quantity of product that a seller is willing and able to supply. Product price is measured on the vertical axis of the graph and quantity of product supplied on the horizontal axis.

What is Price Elasticity of Supply?

Price elasticity of supply (PES or Es) is a measure used in economics to show the responsiveness, or elasticity, of the quantity supplied of a good or service to a change in its price.

Factors that influence the elasticity of supply include the ability to switch to production of other goods, the ability to go out of business, the ability to use other resource inputs and the amount of time available to respond to a price change.




Elasticity And Supply Intercept:

The positioning of a supply curve relative to the price and quantity axes indicates the price elasticity of supply. A straight-line supply curve does not contain all five elasticity alternatives. Nature of a supply curve is revealed by the intersection with the vertical price axis and/or horizontal quantity axis.

There are Five Elasticity Alternatives - 

Alternative
Coefficient (E)
Perfectly Elastic
E = ∞
Relatively Elastic
1 < E < ∞
Unit Elastic
E = 1
Relatively Inelastic          
0 < E < 1
Perfectly Inelastic           
E = 0

1. Perfectly Elastic: The coefficient of elasticity for this alternative is E = ∞. It's a perfectly elastic supply curve, which is horizontal and intersects the vertical price axis.

2. Relatively Elastic: The coefficient of elasticity for this alternative is in the range of 1 < E < ∞.It's elastic supply curve, which is flat but not horizontal and intersects the price axis.

3. Unit Elastic: The coefficient of elasticity for "Unit Elastic" is in the range of E = 1. It reveals a unit elastic supply curve, which is a straight line extending from the origin. Means, If the coefficient is exactly one, the good is said to be unitary elastic. It can be said as if the supply curve is a straight line passing through the origin, then the price elasticity of supply will be equal to unity.

4. Relatively Inelastic: The coefficient of elasticity for this alternative is in the range of 0 < E < 1. It's a relatively inelastic supply curve, which is steep but not vertical and intersects the quantity axis.

5. Perfectly Inelastic: The coefficient of elasticity for this alternative is E = 0. It's a perfectly inelastic supply curve, which is vertical and intersects the horizontal quantity axis.

Graphical Representation of Price Elasticity of Supply and Five Elasticity Alternatives of Supply Curve

Graphical Representation of Price Elasticity of Supply and Five Elasticity Alternatives of Supply Curve

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