by this point you figured out that thinking about supply is very similar to thinking about demand and in the same way we can apply the concept of price elasticity to supply the percent change in quantity supplied for a percent change in price so a supply curve with an elasticity of 0.5 would tell us that a 10 increase in price leads to a 5 increase in the quantity supplied an elasticity of 2 tells us that a 10 increase in price leads to a 20 increase in quantity supplied the larger the number the more responsive the quantity supplied is to a change in price the more elastic it is the stretchier the rubber band is you apply a change in price and it stretches a lot notice that the elasticity of supply is a positive number unlike the elasticity of demand that makes sense when price goes up quantity supplied goes up the supply curve slopes upwards so its elasticity will be positive now when the elasticity of supply is zero like in this graph the supply curve is perfectly perfectly inelastic no matter what the price is the quantity supplied is the same so here's an example the supply of land around kyle field is pretty much perfectly inelastic you can't really make more land you can build more buildings and taller buildings but you can't make more land when the elasticity of supply is greater than zero but less than one we call it inelastic so it is greater than zero but less than one and we'll call it inelastic why because a big change in price has a small effect on quantity remember the rubber band we're pulling on it hard with a big change in price but we're not changing the quantity very much now when the elasticity is greater than one we call that supply elastic it'll have a pretty flat slope a small change in price has a big effect on quantity like a loose rubber band we don't have to pull on it very hard to change the quantity by a lot now finally we can imagine perfectly in elastic supply the elasticity is infinite that's perfectly elastic supply even a tiny change in price will change the quantity supplied enormously infinitely in reality this is pretty unrealistic a small percent change in price leads to an infinite percent reduction in quantity supplied it would tell us that a small change in price leads the producer to supply as much as possible and a tiny reduction in price leads her to stop supplying it all perfectly elastic it's really more useful as an extreme example than necessarily as a real world application so what determines the price elasticity of supply remember that elasticity is a measure of responsiveness the responsiveness of quantity supplied to price so what determines how responsive a business can be it's all about how flexible the business is so what factors go into that first there are inventories and storability if you can store your product then you can respond to changes in price by supplying more or less something like frozen turkeys are easily storable you can sell them next week or next month without any real problems but fresh flowers you need to sell those pretty much right away if your product is storable you have more flexibility and your supply is likely to be more elastic second available inputs and capacity constraints if you can't scale up your production quickly you can't really respond to changes in prices antonio's pizza can get more flour sauce and even delivery drivers much more easily than a hospital can get more mri machines operating rooms and doctors or nurses so if your inputs are easily available or you have extra space to expand you're more flexible and your supply is likely to be more elastic third easy entry and exit the more easy it is for other companies to enter a market the more elastic supply will be it's much easier to open a new pizza shop though it is a lot of hard work than it is to open a new hospital when the price of pizza goes up we're likely to see more pizza places open so if entry into the market is relatively easy supply is likely to be more elastic fourth time adjusting supply takes time so the price elasticity of supply is generally higher over a longer time span if the price of pizza goes up antonios can respond by using up their stored flour and sauce and cheese but there's a limit to how much they have if the price stays high over the next days and weeks they can purchase more flour and sauce and cheese and even hire some more workers but they'll run out of oven space eventually and so over the longer run they might open a new location or other pizza places will open the longer the time span the more elastic supply tends to be