## Price Elasticity of Supply

 Elasticity of supply measures the change in the amount that a firm supplies in response to a change in price. It is measured as follows   percentage change in quantity supplied percentage change in price Again the Q is on top, remember QPR. Values of price elasticity of supply ·        Elasticity is greater than one - the good is elastic and is highly responsive to changes in price. A percentage change in price leads to a larger percentage change in the quantity supplied. ·        Elasticity is equal to one - the good has unitary elasticity, a percentage change in price will lead to an equal percentage change in the quantity supplied. ·        Elasticity is less than one - the good is inelastic and not very responsive to changes in price. A percentage change in price leads to a smaller percentage change in quantity. ·         Elasticity is equal to zero - the good is perfectly inelastic and a change in price lead to no change in the quantity supplied. ·        Elasticity is equal to infinity - the good is perfectly elastic and any decrease in price will cause the quantity supplied to fall to zero.