Define elasticity of supply.

Elasticity of supply measures the responsiveness of the quantity supplied of a good to a change in its price. It is defined as the percentage change in quantity supplied divided by the percentage change in price. Mathematically, it is expressed as:

$$E_s=\frac{\%\text{ change in quantity supplied}}{\%\text{ change in price}}$$

Elasticity of supply can be classified into five categories:

• Perfectly elastic supply (Es = ∞): Supply changes infinitely with a tiny change in price.
• Relatively elastic supply (Es > 1): Supply changes proportionately more than the change in price.
• Unitary elastic supply (Es = 1): Supply changes proportionately to the change in price.
• Relatively inelastic supply (Es < 1): Supply changes less than proportionately to the change in price.
• Perfectly inelastic supply (Es = 0): Supply does not change with any change in price.

Factors affecting elasticity of supply include:

• Production period: Longer production periods tend to have more elastic supply.
• Availability of raw materials: Abundant raw materials increase elasticity.
• Storage capacity: Goods that can be stored easily have more elastic supply.
• Nature of the product: Unique or specialized goods tend to have inelastic supply.