The term elasticity of supply expresses the degree of correlation between supply and price.
Dqs = Change in quantity Supplied
Dps = Change in price
Es = Elasticity of supply
If the little fall in price supply contracts greatly, the supply will be more elastic. But with a greater fall in price supply contracts a little, the supply is said to be inelastic or less elastic. The converse is also true. If a little rise in price leads to a larger extension in supply the supply is more elastic, and if a greater rise in price causes a small extension in supply, the supply is said to be inelastic or less elastic.
More elastic and less elastic supply curves are illustrated with the help of following figures.
Above Fig. shows more elastic supply. OX measures quantity supplied and OY measures price. When price changes by P1P2 i.e. Dp the quantity supplied changes by MM1 or DQ. Here rise in price is much less than the extension in supply. Thus SS1 curve shows elastic supply.
In the figure below S1S1 is the supply curve showing less elastic supply since the rise in price (DP) is more than the extension in supply (DQ).
Unitary elastic supply curve parses through the origin. At every point on this supply curve percentage change in quantity supplied is just equal to percentage in price. This is explained by the diagram below.
An absolutely inelastic supply curve is represented by a vertical straight line and a perfectly inelastic supply curve is represented by a horizontal straight line. The perfectly inelastic and perfectly elastic supply is the two extremes between which there may be varying degrees of elasticity.