Price Elasticity of Supply

Price elasticity of supply measures the responsiveness of quantity supplied to a change in price.

E_s = \frac{\%\text{ change in quantity supplied}} {\%\text{ change in price}}

Types

When $E_s < 1$ . Quantity supplied changes by a smaller percentage than price.

When $E_s = 1$ . Quantity supplied changes by the same percentage as price.

When $E_s > 1$ . Quantity supplied changes by a large percentage than price.

For a good, $E_d = -2$ and $E_s = 1$ . The price rises by 10%. Find the changes in quantity demanded and quantity supplied.

Solution Reveal Hide

\%\Delta Q_d = -2 \times 10\% = -20\%

\%\Delta Q_s = 1 \times 10\% = +10\%

Quantity supplied exceeds quantity demanded, so there is a surplus that puts downward pressure on price.

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November 2, 2026 1 min read

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