Elasticity of Supply: Inside The World's Biggest Baked Bean Factory

Key summary notes on price elasticity of supply

• If supply is elastic, then producers can increase their output without a rise in cost or a time delay
• If supply is inelastic, then firms find it hard to change their production in a given time period

The formula for price elasticity of supply is:

% change in quantity supplied divided by the % change in price

• When Pes > +1, then supply is price elastic
• When Pes < +1, then supply is price inelastic
• When Pes = 0, supply is perfectly inelastic
• When Pes = infinity, supply is perfectly elastic following a change in demand