Define elasticity of supply.

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

Example of elastic supply: A small change in price (P₁ → P₂) leads to a large change in quantity supplied (Q₁ → Q₂).

Graphical representation of different elasticity of supply curves (P₁ = initial price, P₂ = new price).

$E_{s} = \frac{% change in quantity supplied}{% change in price}$

Elasticity of supply can be classified into five categories:

Perfectly elastic supply: $E_{s} = \infty$ (horizontal supply curve)
Relatively elastic supply: $E_{s} > 1$
Unitary elastic supply: $E_{s} = 1$
Relatively inelastic supply: $0 < E_{s} < 1$
Perfectly inelastic supply: $E_{s} = 0$ (vertical supply curve)

The elasticity of supply depends on factors such as the nature of the product, production period, availability of raw materials, storage capacity, and technological advancement.

Discussion

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