Price elasticity of supply-proportionate method and geometric method or point method

price elasticity of supply

Price elasticity of supply is a measurement of percentage change in quantity supplied of a commodity in response to some percentage change in its price.

                If we have to measure the extent of extension and contraction of supply,we should know price elasticity of supply.Price elasticity of supply measures percentage change in quantity supplied caused by a given percentage change in price of a commodity.there are two methods of measuring price elasticity of supply ie,Proportionate method and geometric method.

1)Proportionatemethod: According to this method,elasticity of supply(Es) is the ratio between percentage change in quantity supplied and percentage change in price of commodity.mathematically,

      Es=percentage change in quantity supplied/percentage change in price
symbolically,
                        Es=(-)♢Q/Q×p/♢p

Es stands for elasticity of supply,the symbol ♢stands for change,♢Q stands for change in quantity supplied,Q stands for original or initial quantity supplied,♢p stands for change in prices and P stands for initial or original price.
    change in price(♢P) is obtained by subtracting the newest price denoted as p' from the original price(p) that is ♢p=p-p'
simmillarly change in quantity supplied(♢Q) is obtained by subtracting newest quantity supplied denoted as Q' the from original quantity of commodity supplied that is ♢Q=Q-Q'

2)Geometric Method: this method is also called point method.According to this method elasticity of supply depends upon the origin of supply curve .Assuming the supply curve to be a straight line and positively sloped(upward sloped),We can conceive three possible situations of elasticity of supply:

●situation 1 (Es=1): When a straight line,positively sloped supply curve starts from the pont of origin 'O'.No matter what angle it makes,a straight line(upwards sloping from the origin always shows Es=1

●situation 2(Es<1): when a straight line supply curve shooting from x axis then we say Es<1

●situation 3(Es>1): when a staright line,positively sloped supply curve starts from y axis it always shows that Es>1,irrespective of the angle it makes.

in third figure supply curve is starting from y axis means Es>1