Elasticity of supply can be measured by following formula:
We illustrate below measurement of elasticity of supply at the point P on the supply curve SS according to the above formula.
In Fig. SS1 is the supply curve. P is any point on it. Through P a tangent is drawn meeting X-axis at T and Y-axis at t. PM is the perpendicular drawn from the point P to the X-axis at M.
or more than unity.
Dqs – Change in Quantity Supplied
Dps – Change in Price
Es – Elasticity of Supply