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9) Distinction between movement along the supply curve and shift in the supply
curve?
A)
Basis
Movement along the supply
Shift in supply curve
curve
Meaning
A rise or fall in quantity
A shift of supply curve means
supplied due to change in
change in supply due to
price is called movement
factors other than price
along the same supply curve
Types of movement/shifts
There are two types of
There are two types of shifts in
movements:
supply curve:
Upward movement
Rightward shift
Downward movement
Leftward shift

Price

Price

Quantity

Influence

Here the producer is under the

influence of change in price of
the commodity only.

Quantity

Here, the producer is under the

influence of factors other than
price.

10) What is meant by elasticity of supply? Briefly explain the method of

measuring it?
A) Elasticity of supply is a relative measure of the responsiveness of quantity supplied of a
commodity to a change in its price. The greater the responsiveness of quantity supplied a
commodity to change in its price, the greater its elasticity of supply. In precise term, the elasticity
of supply can be define as the percentage change in price that caused the change in quantity
supplied.
When a small rise in its price of a commodity leads to a relatively large expansion in
supply, the supply is comparatively elastic. But when a rise in price leads to a relatively smaller
expansion in supply, the supply is said to be inelastic.
Measurement of elasticity of supply
1) Percentage Method :- The elasticity of supply is measured by dividing the percentage
change in quantity supplied by the percentage change in price.
Thus,
Es = % change in quantity supplied
% change in price
Es =

P
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Prepared By: Pramod Kr Jha

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P
Q
2) Geometric Method:- Measuring elasticity of supply at a point on the supply curve. A
straight line curve SS has been drawn in the figure below. We are required to measure
elasticity of supply at point R on it corresponding to output OQ and price OP. In order to
measure supply elasticity at pont R we extend the supply curve so that it meets the Xaxis at point T. Then measure of elasticity of supply at point R can be obtained by
dividing the TQ by the distance OQ. Thus,
Supply elasticity at point R on supply curve
SS (Es) = TQ
OQ

Price

Measuring
elasticity of
supply

Q
Quantity

11) What are the factors which determine the elasticity of supply of a
commodity? Give some examples of elastic supply.
A) Factor determining elasticity of supply: Time: The time which is given to the producer to vary output in response to the
change in price. Generally the longer the time producers get to make adjudments
in the level of output in response to the change in price, the greater the elasticity
of supply.
The change in marginal cost of production: The more sharply the change in
marginal cost, less elastic will be the supply of output.
Availability of infrastructure facilities: If infrastructure facilities are available for
expanding output, the elasticity of supply in response to the rise in price will be
relatively large.
Response or behavior of the producer: If the producer do not response positively
to the rise in price, the quantity supplied of a commodity would not increase
much. On the other hand, if producers behave in such a way as to maximize
profit. They will response positively to expand output by a large amount in
response to rise in price.
12) What are the degrees of types of elasticity of supply?
A) The degree of types of elasticity of supply are:
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Prepared By: Pramod Kr Jha

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Perfectly inelastic supply: When the elasticity of supply is equal to zero is called
perfectly inelastic supply. The supply of a commodity is said to be perfectly inelastic
S = 0at all in response to change in its price. Supply
when quantity supplied does not change
of rare good is one of these types as their supply cannot change with change in price.
P1

Perfectly
inelastic supply
curve

P
P2

Quantity

Inelastic supply: When the elasticity of supply is less than one ot is inelastic supply.
When the percentage change in quantity supplied is less than the percentage change in
price, supply will be less than unit elastic.

Price

S, Es < 1

Quantity

Unit elastic: The supply of a commodity is said to be unit elastic when percentage change
in supply is equal to percentage change in price.

Price

S, Es = 1

Quantity

Elastic supply: When percentage change in supply is greater than percentage change in
price is said to be more than unit elastic or elastic supply curve.

Price

S, Es > 1

Quantity

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Prepared By: Pramod Kr Jha

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Price

Perfectly Elastic: The supply of a commodity will be perfectly elastic when its supply
changes to an extent irrespective of any change in price.

Es = infinite

Quantity

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