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Price elasticity of supply (PES) can be measured on the very same lines as we measured the price elasticity of demand. Elasticity of supply can either be equal to unity or greater than unity or less than unity.

Measuring PES by Geometric Method:

Geometric method for the measurement of price elasticity of supply (PES) consists of following three main approaches:

(1) Equal to Unity – Diagram and Table:

If a change in the quantity supplied, and a change in the price, vary in equal proportion, the ratio will be equal to one and the price elasticity of supply (PES) will be equal to unity. This is shown with the help of a table and the diagrams (Fig. 7.6 and Fig. 7.7) given below:

If the supply curve is a straight line and is also equal to unity, it will pass through the origin as is shown in Fig. 7.6. If the point on the arc supply curve is such that the tangent passes through the origin, the elasticity at the point will also be equal to unity as is shown in Fig. 7.7.

(2) Greater than Unity – Diagram and Table:

If a change of 1 percent in the price leads to more than 1 percent change in supply, the price elasticity of supply (PES) is said to be greater than unity. This is shown with the help of a table and the diagrams (Fig. 7.8 and Fig. 7.9) given below:

In Fig. 7.8, the supply curve SS/cuts the Y-axis, the elasticity is greater than unity. If the supply curve is an arc, then the point on the curve whose tangent cuts the price axis will have elasticity greater than unity as is shown in diagram 7.9.

(3) Less than Unity – Diagram and Table:

If 1 percent change in price is accompanied by less than 1 percent change in supply, the price elasticity of supply (PES) is said to be less than unity. This is shown with the help of a table and the diagrams (Fig. 7.10 and Fig. 7.11) given below:

If the supply curve cuts the X-axis, the elasticity will be less than unity as is shown in fig. 7.10, and Fig. 7.11. The tangent at point C intersects the X-axis at the point d. This means elasticity of supply is less than one.