Price Elasticity of Supply (PES)
A diagram illustrating different types of price elasticity of supply: perfectly inelastic, perfectly elastic, and unitary elastic supply curves.
perfectly inelastic
Perfectly Inelastic Supply: Vertical line — quantity supplied remains constant regardless of price (PES = 0).
perfectly elastic
Perfectly Elastic Supply: Horizontal line — any quantity supplied at one fixed price (PES = ∞).
unitary
Unitary Elastic Supply: Upward-sloping supply curve with PES = 1 — proportional response in supply to price changes.
The diagram shows three types of supply elasticity, which measure how quantity supplied responds to changes in price.
A perfectly inelastic supply curve is vertical, indicating that quantity supplied does not change regardless of the price (PES = 0).
A perfectly elastic supply curve is horizontal, indicating that firms will supply any quantity at one fixed price, but nothing at any other price (PES = ∞).
A unitary elastic supply curve has a constant elasticity of 1, meaning the percentage change in quantity supplied is equal to the percentage change in price.
Elasticity of supply is influenced by factors such as time, availability of inputs, spare production capacity, and the flexibility of the production process.
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