EconomicsISC Class 12 · Supply

Elasticity of Supply: Degrees, Percentage Method, Geometric Method and Numericals

Updated 17 October 2026 · Fact-checked

Elasticity of supply (Es) measures how much quantity supplied responds to a change in price: Es = (percentage change in quantity supplied) / (percentage change in price). It is positive because the supply curve slopes upward. By the geometric method, a straight-line supply curve that meets the price axis has Es > 1, one through the origin has Es = 1 and one that meets the quantity axis has Es < 1.

Extend a straight supply curve backwards: where it meets the axes decides Es, whatever its slope, as it is above 1, equal to 1 or below 1.

Illustration drawn for QuestionBuddy.

Understand Elasticity of Supply: Degrees, Percentage and Geometric Methods

1. Meaning. Elasticity of supply is the degree of responsiveness of the quantity supplied of a good to a change in its price. Unlike demand, supply moves in the same direction as price, so Es is positive.

2. Degrees of elasticity of supply.

Perfectly elastic (Es = infinity): horizontal supply curve; producers supply any quantity at one price.
Elastic (Es > 1): quantity supplied changes by a larger percentage than price.
Unitary (Es = 1): equal percentage changes.
Inelastic (Es < 1): quantity changes proportionately less than price.
Perfectly inelastic (Es = 0): vertical supply curve; quantity is fixed whatever the price (for example, a good that cannot be produced or stored at short notice).

3. Percentage method. Es = (percentage change in Qs) / (percentage change in P) = (change in Qs / original Qs) / (change in P / original P). The original values are the base. A fall in price with a fall in quantity gives the same positive result.

4. Geometric method (straight-line supply curves). Extend the supply curve backwards:

If it meets the price (Y) axis at a positive point, Es > 1 at every point on it.
If it passes through the origin, Es = 1 at every point, whatever its slope.
If it meets the quantity (X) axis, Es < 1 at every point.

For a line meeting the quantity axis at Q0, Es at a point with quantity Q equals (Q - Q0) / Q. If the line meets the axis on the negative side (so it also cuts the price axis above the origin), the same formula gives a value above 1. Note that the slope of the line alone does not decide Es; only where it meets the axes does.

5. Factors affecting elasticity of supply.

Time period: supply is more elastic in the long run, as producers can adjust capacity; in the market period (very short run) it can be almost perfectly inelastic.
Nature of the good: perishable goods (fresh vegetables, milk) have low elasticity because they cannot be stored; durable goods that can be stored have higher elasticity.
Availability of inputs and spare capacity: idle capacity or ready inputs raise elasticity.
Technology and methods of production: flexible or improved technology makes supply more elastic.
Producer's attitude: producers willing to expand output, take risks or adopt new methods make supply more elastic, while conservative producers who are reluctant to change output or hold back stock expecting higher prices make supply less elastic.
Mobility of factors and cost conditions: if costs rise sharply with output (diminishing returns), supply is less elastic.

6. Why it matters. A government or trader who knows that supply of a crop is inelastic in the short run can expect price spikes after a poor harvest; this links to the market mechanism chapter.

Elasticity of Supply: Degrees, Percentage and Geometric Methods: key facts

Percentage method: Es = (change in Qs / Qs) / (change in P / P)
Geometric: through origin: Es = 1 at every point
Geometric: meets price axis: Es > 1
Geometric: meets quantity axis: Es < 1; Es = (Q - Q0) / Q

How to answer Elasticity of Supply: Degrees, Percentage and Geometric Methods questions

Supply elasticity sums mirror demand elasticity but the sign stays positive.

1Find the change in price and the change in quantity supplied.
2Express both as percentages of the ORIGINAL price and quantity.
3Divide the quantity percentage by the price percentage.
4To find a new quantity, multiply percentage change in price by Es to get percentage change in quantity, then apply it to the original quantity.
5For the geometric method, extend the line to see where it meets an axis.

Elasticity of Supply: Degrees, Percentage and Geometric Methods in real life

The idea, met in an everyday situation. Answer the question in your own words, then compare with the model answer. The one-line hook is what to remember.

Supply of tomatoes versus tomato sauce

Suppose the price of fresh tomatoes jumps by 40 per cent. Farmers cannot grow more this week, but over a full season they plant more. A sauce factory with spare machines can raise output within days.

If a season later the supply of tomatoes has elasticity 1.5, by how much does the quantity supplied rise from 2,000 kg?

Try it first, then show the solutionSolution

Es = 1.5 and price rise = 40%, so quantity rise = 1.5 x 40 = 60%.
New supply = 2,000 x 1.6 = 3,200 kg.

Answer: Supply rises by 60 per cent to 3,200 kg; this week it hardly changes (Es near zero), which shows why time matters.

Memory hook: Given time, supply stretches.

Tricks to remember Elasticity of Supply: Degrees, Percentage and Geometric Methods

Short memory aids. Say each one aloud once, then use it on a question the same day.

Origin means one
A supply line that points to the origin has Es = 1 whether steep or flat.
Use it when: Geometric method MCQs.
Y axis higher, X axis lower
Cuts Y (price) axis: Es above 1. Cuts X (quantity) axis: Es below 1.
Use it when: Quick recall of the geometric rule.
Perishable means stubborn
Cannot store, cannot wait: low elasticity.
Use it when: Factors question.

Elasticity of Supply: Degrees, Percentage and Geometric Methods: solved examples

Ordered from board level to HOTS. Try each one before you open the solution.

Example 1: Reading the percentages · 1 mark · MCQBoard level

The quantity supplied of a good rises by 6 per cent when its price rises by 4 per cent. The elasticity of supply is:
(a) 0.67
(b) 1.5
(c) 2.4
(d) 24

Try it first, then show the solutionSolution

Es = 6/4 = 1.5, so supply is elastic.

Answer: (b) 1.5

Example 2: Percentage method · 3 marks · Short answerBoard level

When the price of a good rises from Rs 10 to Rs 12 per unit, the quantity supplied rises from 200 to 260 units. Calculate the elasticity of supply and name its degree. (3 marks)

Try it first, then show the solutionSolution

Percentage change in price = 2/10 x 100 = 20%.
Percentage change in quantity = 60/200 x 100 = 30%.
Es = 30/20 = 1.5.

Answer: Es = 1.5 (more than 1): supply is elastic.

Example 3: Fall in price and finding a new quantity · 4 marks · Short answerHarder board level

The price of a good falls from Rs 8 to Rs 6 and quantity supplied falls from 500 to 425 units. (a) Find Es. (b) With the same Es, the price then rises by 20 per cent from Rs 6. Find the new quantity supplied. (4 marks)

Try it first, then show the solutionSolution

(a) Percentage change in price = -2/8 = -25%; percentage change in quantity = -75/500 = -15%. Es = 15/25 = 0.6 (inelastic).
(b) Price rise = 20% (Rs 6 to Rs 7.20). Quantity change = 0.6 x 20 = 12%.
New quantity = 425 x 1.12 = 476 units.

Answer: (a) Es = 0.6 (inelastic). (b) Quantity supplied rises to 476 units at Rs 7.20.

Example 4: Geometric method · 4 marks · Short answerHarder board level

Two straight-line supply curves are: Curve A, P = 20 + 2Q, and Curve B, P = 2Q - 20 (P in rupees, Q in units). For each, find the point where P = Rs 60, calculate Es by the geometric method (Es = (Q - Q0)/Q where Q0 is where the extended line meets the quantity axis) and state where the curve meets the axes. (4 marks)

Try it first, then show the solutionSolution

Curve A: at P = 60, 2Q = 40, so Q = 20. Setting P = 0 gives Q0 = -10 (the curve meets the price axis at Rs 20). Es = (20 - (-10))/20 = 30/20 = 1.5 > 1.
Check by percentages: Es = (1/slope) x (P/Q) = 0.5 x 60/20 = 1.5.
Curve B: at P = 60, 2Q = 80, so Q = 40. Q0 = 10 (the curve meets the quantity axis). Es = (40 - 10)/40 = 0.75 < 1.
Check: 0.5 x 60/40 = 0.75.

Answer: Curve A (meets the price axis): Es = 1.5, above one. Curve B (meets the quantity axis): Es = 0.75, below one.

Example 5: Time and elasticity · 4 marks · Short answerHOTS / competency

The price of tomatoes rises by 40 per cent. In the market period the supply stays at 2,000 kg (Es = 0). After a season, supply elasticity is 1.5. Calculate the new quantity supplied after a season, and explain two reasons why elasticity differs between the two periods. (4 marks)

Try it first, then show the solutionSolution

After a season: percentage change in quantity = 1.5 x 40 = 60%.
New quantity = 2,000 x 1.6 = 3,200 kg.
Reason 1: farmers can plant more only after the crop cycle, so supply is fixed in the very short run.
Reason 2: tomatoes are perishable and cannot be stored, so stock cannot be released quickly; over a season inputs and land can be reallocated.

Answer: Supply rises by 60% to 3,200 kg after a season; in the market period it is perfectly inelastic because of fixed supply and perishability, while time allows production to adjust.

Where students lose marks in Elasticity of Supply: Degrees, Percentage and Geometric Methods

The slips examiners see most often, and what to write instead.

Mistake: Using the new price or quantity as the base
Dividing by the later value.
Wrong working
% change in P = 2/12 = 16.7%.
Right working
% change in P = 2/10 = 20%.
Do this: Original value in the denominator.
Usually costs: 1-2 marks.
Mistake: Judging elasticity from the slope
Believing a steep line is inelastic.
Wrong working
A steep straight line through the origin has Es below 1.
Right working
Any straight line through the origin has Es = 1; only the intercept decides.
Do this: Extend the line to the axes before answering.
Usually costs: 1-2 marks.
Mistake: Negative Es
Carrying the sign convention of demand.
Wrong working
Es = -1.5.
Right working
Es = +1.5 (price and quantity supplied move together).
Do this: Supply elasticity is positive.
Usually costs: 1 mark.
Mistake: Mixing up the two axes in the geometric rule
Reversing the rule.
Wrong working
A curve meeting the quantity axis has Es > 1.
Right working
Meets quantity axis: Es < 1; meets price axis: Es > 1.
Do this: Remember 'Y higher, X lower'.
Usually costs: 1-2 marks.

Exam tips

The syllabus asks for the percentage and geometric methods of elasticity of supply; learn both with one numerical each.
Draw three small supply diagrams for the geometric rule, each extended with dotted lines to the axes.
Link time period to elasticity with one example (agricultural goods or perishable items).
State the degree after every numerical, and keep Es positive.
Mention Indian examples such as farm produce or milk where relevant, as the syllabus encourages.

Practice questions on Elasticity of Supply: Degrees, Percentage and Geometric Methods

Write each answer on paper first. Open the hint only if you are stuck, and the answer only when you have finished.

Q1 · 1 mark · MCQBoard level
A horizontal supply curve shows that supply is:
(a) perfectly inelastic
(b) unitary elastic
(c) perfectly elastic
(d) relatively inelastic
Hint
Any quantity at one price.
Answer
(c) perfectly elastic
Q2 · 3 marks · Short answerBoard level
A cloth maker raises the price of a shirt from Rs 60 to Rs 66 and the shops' supply rises from 150 to 168 shirts. Calculate the elasticity of supply and state the degree. (3 marks)
Hint
Original values as base.
Answer
% change in P = 6/60 = 10%; % change in Q = 18/150 = 12%; Es = 12/10 = 1.2 (elastic).
Q3 · 4 marks · Short answerHarder board level
The elasticity of supply of a good is 2. Its price rises from Rs 50 to Rs 56 and the original quantity supplied is 250 units. Find the new quantity supplied. (4 marks)
Hint
Find the percentage change in price first.
Answer
% change in P = 6/50 = 12%; % change in Q = 2 x 12 = 24%; new quantity = 250 x 1.24 = 310 units.
Q4 · 4 marks · Short answerHarder board level
Two straight-line supply curves are: A, P = 40 + 4Q, and B, P = 2Q - 20. Use the geometric method (Es = (Q - Q0)/Q) to find Es at Q = 5 on A and at Q = 20 on B. Also state the elasticity of the line P = 3Q at any point. (4 marks)
Hint
Find Q0 by putting P = 0.
Answer
A: P = 60 at Q = 5; P = 0 at Q0 = -10; Es = (5 + 10)/5 = 3 (meets the price axis, above 1). B: P = 20 at Q = 20; Q0 = 10; Es = (20 - 10)/20 = 0.5 (meets the quantity axis, below 1). P = 3Q passes through the origin, so Es = 1 at every point.
Q5 · 3 marks · Short answerHOTS / competency
A farmer's supply of wheat has Es = 0.4 in the short run and 1.6 in the long run. If the price of wheat rises by 25 per cent and the current supply is 1,000 quintals, find the supply in each period and explain why the long-run response is larger. (3 marks)
Hint
Percentage change in Q = Es x percentage change in P.
Answer
Short run: 0.4 x 25 = 10%, so 1,100 quintals. Long run: 1.6 x 25 = 40%, so 1,400 quintals. In the long run the farmer can bring more land under wheat, change inputs and invest in storage and equipment, so supply adjusts more fully to the price.

Test your recall

Answer in your head or on paper first, then open the card. Pulling an answer out of memory makes it stick far better than re-reading.

1.Sign of Es?Show answer
Positive.
2.Es of a vertical supply curve?Show answer
Zero.
3.Es at any point of the line P = 5Q?Show answer
One.
4.Supply curve meeting the quantity axis: Es?Show answer
Less than one.
5.How does the length of time affect Es?Show answer
More time lets producers change capacity, inputs and technology, so Es rises.

Elasticity of Supply: Degrees, Percentage and Geometric Methods: frequently asked questions

What is elasticity of supply?

The responsiveness of quantity supplied to a change in the price of the good.

How do you calculate it by the percentage method?

Divide the percentage change in quantity supplied by the percentage change in price.

What does the geometric method say?

Extend the straight supply line: meeting the price axis gives Es above 1, the origin gives Es equal to 1, the quantity axis gives Es below 1.

Which goods have low elasticity of supply?

Perishable goods and goods needing a long production period, such as farm crops in the short run.