Editing Price elasticity of supply (section)

== Elasticity versus slope  ==
The elasticity of supply will generally vary along the curve, even if supply is linear so the slope is constant.<ref name="png" />  This is because the slope measures the absolute increase in quantity for an absolute increase in price, but the elasticity measures the percentage change. This also means that the slope depends on the units of measurement and will change if the units change (e.g., dollars per pound versus dollars per ounce) while the elasticity is a simple number,  independent of the units (e.g., 1.2). This is a major advantage of elasticities. 

The slope of the supply curve is ''dP/dQ'', while the elasticity is  ''(dQ/dP)(P/Q)''.   Thus, a supply curve with steeper slope (bigger  ''dP/dQ'' and thus smaller ''dQ/dP'') is less elastic, for given   ''P''   and   ''Q''.  Along a linear supply curve such as      ''Q = a + b P''    the slope is constant (at  ''1/b'')   but the elasticity is  ''b(P/Q)'',    so  the elasticity rises with  greater   ''P''   both from the direct effect and the increase in  ''Q(P)''.   

Another special feature of  the  linear supply curve  arises because its elasticity can also be written as  bP/(a + bP), which is less than 1 if    ''a < 0''   and greater than 1 if    ''a > 0''. Linear supply curves which cut through the positive part of the price axis and  have zero quantity supplied if the price is too low (''P < -a/''b) have ''a < 0''   and hence they always have elastic supply.<ref>Research and Education Association (1995). pp. 595–97.</ref> Curves which cut through the positive part of the quantity axis and have positive quantity supplied   (''Q = a'') even if the price is zero have    ''a > 0''  and hence  always have inelastic supply. Curves which go through the origin have    ''a = 0''   and hence have an elasticity of 1.


When looking at the price elasticity of supply, there are five types. The five types are perfectly inelastic supply, relatively inelastic supply, unit elastic supply, relatively elastic supply, and perfectly elastic supply. These five types help to show how different products supply quantity changes when faced with changed in price.

'''Perfectly inelastic supply:''' This is when the '''E<sub>s</sub>''' formula equals to zero, meaning that there is no change in the supply when there are price changes. This can be the case where there is a limited quantity of supply, for example, if there is only 200 of a certain product made and there will never be any more made, there will be no increase or decrease in the quantity of supply.<ref name="Economics for today">{{cite book |last1=Layton |first1=Allan P. |last2=Robinson |first2=Tim |last3=Tucker III |first3=Irvin B. |title=Economics for today |date=2015 |location=South Melbourne, Vic. |isbn=9780170347006 |pages=119–123 |edition=5th}}</ref>

'''Relatively inelastic supply:''' This is when the '''E<sub>s</sub>''' formula gives a result between zero and one, meaning that when there is a change in price, the percentage change in supply is lower than the percentage change in price. For example, if a product costs $1 and then increases to $1.10 the increase in price is 10% and therefore the change in supply will be less than 10%.<ref name="Economics for today" />

'''Unit Elastic supply:''' This is when the '''E<sub>s</sub>''' formula equals to one, meaning that quantity supplied and price change by the same percentage. Using the previous example to show unit elasticity, when there is a 10% increase in price, there will also be a 10% increase in quantity supplied.<ref name="Economics for today" />

'''Relatively elastic supply:''' This is when the '''E<sub>s</sub>''' formula gives a result above one, meaning that when there is a change in price, the percentage change in supply is higher than the percentage change in price. Using the above example to show an elastic supply, when there is a 10% increase in price there will be more than a 10% increase in supply.<ref name="Economics for today" />

'''Perfectly elastic supply:''' This is when the '''E<sub>s</sub>''' formula actually gives an infinite result, meaning that the quantity that can be supplied is infinite, however, that is only at a specific price and if the price changes there will be no quantity supplied at all. For example, there may be an infinite supply of product at a price of $1 but if that price changes to $1.10 then the supply becomes zero.<ref name="Economics for today" />