# Measurement of elasticity of supply

There are two methods to measure elasticity of supply. They are

- Point elasticity
- ÂƒArc elasticity

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# Point elasticity

Under the point method of measuring elasticity, we study the changes in quantity supplied at a particular point using the below formula.

Point elasticity = p / q x âˆ†q / âˆ†p

Where,

p = Price

q = Quantity

âˆ†p = Change in price

âˆ†q = Change in quantity

Example

Quantity (units) |
Price (â‚¹) |

50 | 10 |

75 | 15 |

Solution

p = â‚¹ 10
q = 50
âˆ†p = (15-10) = â‚¹ 5
âˆ†q = (75-50) = 25
Using the following formula,
= p / q x âˆ†q / âˆ†p
We get,
= 10 / 50 x 25 / 5
= 1

# Arc elasticity

In order to measure the elasticity of supply between price changes more accurately, we use the following formula.

= âˆ†q / âˆ†p x (p1 + p2) / (q1 + q2)

Where,

âˆ†p = change in price and,

âˆ†q= change in quantity

p1 = original price

p2 = new price

q1 = original quantity

q2 = new quantity

Example

Quantity (units) |
Price (â‚¹) |

250 | 100 |

280 | 120 |

Solution

= âˆ†q / âˆ†p x (p1 + p2) / (q1 + q2)

We get

= 30 / 20 x (100 + 120) / (250 + 280)

= 0.6

We get

= 30 / 20 x (100 + 120) / (250 + 280)

= 0.6

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