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Price Elasticity of Supply Calculator

LAST UPDATE: June 20th, 2018

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What is price elasticity of supply?

Price elasticity of supply (PES) measures how responsive supply of an item in relation to changes in its price.

A product with a PES of more than 1 is said to be elastic. When price changes a little, the supply of the product will change by a larger percentage.

A product with a PES of 1 is said to be unit elastic. Supply changes at the same percentage that price changes.

A product with a PES of 0 to 1 is said to be inelastic. Supply changes at a smaller percentage than the price.

A product with a PES of 0 is said to have fixed supply. Even with large price changes, there will be no increase or decrease in the supply of the good.

Formula

Price Elasticity of Supply = % Change in Quantity Supplied / % Change in Price

\text{Elasticity} = \frac{\frac{\text{Q2 - Q1}}{\text{Q1}}}{\frac{\text{P2 - P1}}{\text{P1}}}

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