FIGURE 5.3 Price Elasticity of Supply We calculate the price elasticity of supply as the percentage change in

quantity divided by the percentage change in price.

Using the Midpoint Method,

Again, as with the elasticity of demand, the elasticity of supply is not followed by any units. Elasticity is a ratio

of one percentage change to another percentage change—nothing more—and we read it as an absolute value. In

this case, a 1% rise in price causes an increase in quantity supplied of 3.5%. The greater than one elasticity of

supply means that the percentage change in quantity supplied will be greater than a one percent price change.

If you're starting to wonder if the concept of slope fits into this calculation, read the following Clear It Up box.

CLEAR IT UP

Is the elasticity the slope?
It is a common mistake to confuse the slope of either the supply or demand curve with its elasticity. The slope is the
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