Toto: Created English encyclopedia entry on Elasticity of Supply following Wikipedia-style standards

2026-10-06T04:13:32Z

Created English encyclopedia entry on Elasticity of Supply following Wikipedia-style standards

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'''Elasticity of supply''' measures the responsiveness of the quantity supplied of a good or service to a change in its price. It is a central concept in [[microeconomics]] and is closely related to the [[elasticity of demand]].<ref name="wiki">Wikipedia contributors, "Price elasticity of supply".</ref>

== Price elasticity of supply ==

The '''price elasticity of supply''' is the percentage change in quantity supplied divided by the percentage change in price:

::'''PES = (% change in quantity supplied) ÷ (% change in price)'''

Because quantity supplied generally rises when price rises, the price elasticity of supply is normally positive.<ref name="wiki"/>

== Categories ==

{| class="wikitable"
! Value
! Category
! Meaning
|-
| PES > 1
| Elastic
| Quantity supplied responds proportionally more than price.
|-
| PES = 1
| Unit elastic
| Quantity supplied responds proportionally to price.
|-
| PES < 1
| Inelastic
| Quantity supplied responds proportionally less than price.
|-
| PES = 0
| Perfectly inelastic
| Quantity supplied is fixed regardless of price.
|-
| PES = ∞
| Perfectly elastic
| Any price decrease reduces supply to zero.
|}

== Determinants ==

The elasticity of supply depends chiefly on:

* '''Time period''' — supply is more elastic in the long run, when firms can adjust all inputs, than in the short run.
* '''Spare capacity''' — firms with unused capacity can increase output more easily.
* '''Availability of inputs''' — ease of obtaining labour, materials, and equipment.
* '''Storage and mobility''' — the extent to which goods can be stored or factors moved between uses.

== Importance ==

The elasticity of supply, together with the elasticity of demand, determines how the burden of a tax is shared between producers and consumers and how quickly markets adjust to shifts in demand. It also matters for understanding the sources of [[inflation]]: when supply is inelastic, demand shocks produce larger price increases.<ref name="wiki"/>

== See also ==

* [[Elasticity of Demand]]
* [[Supply and demand]]
* [[Taxation]]
* [[Microeconomics]]

== References ==

<references />

[[Category:Economics]]
[[Category:Microeconomics]]
[[Category:Elasticity]]

Elasticity of Supply - Revision history

Toto: Created English encyclopedia entry on Elasticity of Supply following Wikipedia-style standards