Price elasticity of supply - It measures degree of responsiveness of supply of a commodity due to a change in its price.
In other words, price elasticity of supply of a commodity can be expressed as a ratio of percentage (proportionate) change in supply of a commodity to percentage change in price.
Percentage Method of measuring elasticity of supply:
This method measures elasticity of supply as a ratio of percentage change in supply to percentage in price.
On the basis of this method elasticity of supply is of three types-
i) More than unitary elastic supply (Es >1):- When percentage change in supply of a commodity is more than the percentage change in its price, such supply is called highly elastic supply.
ii) Unitary elastic supply (Es =1):- When percentage change in supply of a commodity is equal to the percentage change in its price, such supply is called unitary elastic supply.
iii) Less than unitary elastic supply (Es< 1):- When percentage change in supply of a commodity is less than the percentage change in its price, such supply is called less than unitary elastic supply.
