Question

Explain the various methods of measuring price elasticity of supply.

Answer 1

Price elasticity of supply measures the degree of extension and contraction of supply in response to a given change in own price of the commodity.

Various types of price elasticity of supply are:-

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

2) Geomtric method: Geometrically, elasticity os supply depends on the origin of the supply curve.