How is the elasticity of supply calculated?

The elasticity of supply is calculated by dividing the percentage change in quantity supplied by the percentage change in price. The formula for calculating the elasticity of supply is as follows:

Elasticity of Supply = (% Change in Quantity Supplied) / (% Change in Price)

To calculate the percentage change in quantity supplied, you need to subtract the initial quantity supplied from the final quantity supplied, divide it by the initial quantity supplied, and then multiply by 100. The formula for calculating the percentage change in quantity supplied is as follows:

% Change in Quantity Supplied = ((Final Quantity Supplied - Initial Quantity Supplied) / Initial Quantity Supplied) * 100

Similarly, to calculate the percentage change in price, you need to subtract the initial price from the final price, divide it by the initial price, and then multiply by 100. The formula for calculating the percentage change in price is as follows:

% Change in Price = ((Final Price - Initial Price) / Initial Price) * 100

Once you have calculated the percentage change in quantity supplied and the percentage change in price, you can substitute these values into the elasticity of supply formula to find the elasticity of supply. The resulting value will indicate the responsiveness of quantity supplied to changes in price. If the elasticity of supply is greater than 1, supply is considered elastic, meaning that a small change in price leads to a relatively larger change in quantity supplied. If the elasticity of supply is less than 1, supply is considered inelastic, indicating that a change in price has a relatively smaller effect on quantity supplied.