How this calculator works
Price elasticity of supply measures how much the quantity producers offer responds to a price change. A value above one means supply is elastic: quantity moves proportionally more than price. A value below one means supply is inelastic, which is typical when capacity, land or skilled labour cannot be expanded quickly. The standard method divides the percentage change in quantity by the percentage change in price using period 1 as the base, so it gives different answers depending on which direction you move. The midpoint method averages the two periods in the denominator, producing the same elasticity whichever way the change is read.
Formula
Standard elasticity = ((Q2 - Q1) / Q1) / ((P2 - P1) / P1). Midpoint elasticity = ((Q2 - Q1) / ((Q1 + Q2) / 2)) / ((P2 - P1) / ((P1 + P2) / 2)). To solve for Q2 with a known elasticity, use Q2 = Q1 × (1 + elasticity × price change / P1) for the standard method.
Worked example
A price rising from $10 to $12 while quantity supplied rises from 100 to 120 gives a standard elasticity of 20% / 20% = 1. The midpoint method gives 18.1818% / 18.1818% = 1, unchanged because the two changes are symmetric here.
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Frequently asked questions
Which method should I use?
Use the midpoint method when comparing elasticities across a wide price range or in both directions, because it is symmetric. The standard method is fine for small changes and matches how many textbooks define point elasticity.
What does an elasticity of zero mean?
Quantity supplied does not change when price changes, which describes perfectly inelastic supply: a fixed number of seats, for example. It is rare in the long run because producers eventually adjust capacity.
Why is supply elasticity usually higher in the long run?
Producers need time to build capacity, hire workers and enter the market. In the short run, supply is limited by existing plants and equipment, so the response to a price change is smaller.