Q.Explain the different degrees of price elasticity of supply.

Price elasticity of supply can range across five recognised degrees depending on its numerical value.

Price elasticity of supply, $E_s = \dfrac{\%\Delta Q_s}{\%\Delta P}$, is classified into five degrees by its numerical value:

1. Perfectly elastic ($E_s = \infty$) — an infinitesimally small rise in price causes an infinitely large rise in quantity supplied; the supply curve is a horizontal straight line.
2. Relatively elastic ($E_s > 1$) — quantity supplied changes by a larger percentage than price; geometrically, a straight-line supply curve cutting the price axis.
3. Unitary elastic ($E_s = 1$) — the percentage change in quantity supplied exactly equals the percentage change in price; geometrically, any straight-line supply curve passing through the origin.
4. Relatively inelastic ($E_s < 1$) — quantity supplied changes by a smaller percentage than price; geometrically, a straight-line supply curve cutting the quantity axis. …

Assuming, as with demand, that supply elasticity is normally negative — since price and quantity supplied move in the SAME direction under the Law of Supply, $E_s$ is nor …