Price Elasticity of Supply Calculator
Enter the price and quantity supplied before and after a price change to see the price elasticity of supply by the midpoint method.
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Price Elasticity of Supply Calculator
Our Price Elasticity of Supply Calculator shows how strongly the quantity that producers supply responds to a change in price. Type the price and the quantity supplied before the change, then the price and quantity after it. It returns the price elasticity of supply (PES) by the midpoint method, the percentage change in price and in quantity, and whether supply is elastic, inelastic or unit elastic. It is built for economics students checking homework, teachers preparing examples and business owners judging how fast output can follow a price rise.
Quick answer
Price elasticity of supply is % change in quantity supplied ÷ % change in price: if the price rises from 8 to 12 (40%) and the quantity supplied rises from 450 to 550 (20%), PES = 20% ÷ 40% = 0.5.
- PES above 1: supply is elastic.
- PES below 1: supply is inelastic.
- PES equal to 1: supply is unit elastic.
- PES of 0: supply is perfectly inelastic.
What Is Price Elasticity of Supply?
Price elasticity of supply (PES) measures how much the quantity supplied changes when the price changes. It compares the two changes in percent, so the result has no unit and can be compared across products as different as wheat, flats and software.
A PES of 0.5 means that a 1% rise in price brings about 0.5% more supply. A PES of 3 means the same 1% rise brings about 3% more. Because producers normally offer more when the price is higher, PES is normally a positive number.
Price Elasticity of Supply Formula
%ΔQ = (Q2 − Q1) ÷ avg Q × 100
%ΔP = (P2 − P1) ÷ avg P × 100
avg Q = (Q1 + Q2) ÷ 2
avg P = (P1 + P2) ÷ 2
- P1 and Q1: the initial price and the quantity supplied at that price.
- P2 and Q2: the new price and the quantity supplied at that price.
- %ΔQ: the percentage change in quantity supplied.
- %ΔP: the percentage change in price.
This is the midpoint (or arc elasticity) formula. Each change is divided by the average of the two values instead of the starting value, so the answer is the same whether the price goes up or comes back down.
How to Calculate Price Elasticity of Supply
A bakery supplies 450 loaves a day at a price of 8. When the price rises to 12 it supplies 550:
%ΔQ = 100 ÷ 500 × 100 = 20%
PES = 20% ÷ 40%
= 0.5
- Find the average price. (8 + 12) ÷ 2 = 10.
- Find the percentage change in price. (12 − 8) ÷ 10 × 100 = 40%.
- Find the average quantity. (450 + 550) ÷ 2 = 500.
- Find the percentage change in quantity. (550 − 450) ÷ 500 × 100 = 20%.
- Divide. 20% ÷ 40% = 0.5.
The PES is 0.5. Supply is inelastic: the quantity grew by half as much, in percent, as the price.
How to Read the Result
| PES | Supply is |
|---|---|
| 0 | Perfectly inelastic |
| Between 0 and 1 | Inelastic |
| Exactly 1 | Unit elastic |
| Above 1 | Elastic |
| Infinite | Perfectly elastic |
- Inelastic: producers cannot change output much, so quantity moves by a smaller percentage than price.
- Elastic: producers can adjust easily, so quantity moves by a larger percentage than price.
- Unit elastic: quantity and price move by the same percentage.
- Perfectly inelastic: the quantity is fixed whatever the price, like seats in a stadium tonight.
- Perfectly elastic: any amount is supplied at one price and nothing below it.
A negative result means price and quantity moved in opposite directions. That is not a movement along a supply curve. Usually something else, such as a cost increase or bad weather, shifted supply at the same time.
Elasticity on a Supply Graph
- Starts on the price axis: supply is elastic (PES above 1) at every point.
- Starts at the origin: supply is unit elastic (PES of 1) at every point, whatever the slope.
- Starts on the quantity axis: supply is inelastic (PES below 1) at every point.
A vertical supply line is perfectly inelastic and a horizontal one is perfectly elastic. Slope and elasticity are not the same thing: slope uses changes in units, elasticity uses changes in percent.
Midpoint Method vs Start-Point Method
The simple (start-point) method divides each change by the starting value. It gives a different answer depending on the direction of the move. Take the bakery, first with the price rising from 8 to 12 and then falling back from 12 to 8:
| Price move | Start point | Midpoint |
|---|---|---|
| 8 to 12 | 0.4444 | 0.5 |
| 12 to 8 | 0.5455 | 0.5 |
The midpoint method returns 0.5 both ways, which is why textbooks prefer it for a move between two points. The calculator shows the start-point figure as a separate row so that you can match either convention. For very small price changes the two methods give almost the same answer.
Price Elasticity of Supply Examples
Elastic supply. A print shop sells 1,000 T-shirts a month at 20. When the price rises to 22 it prints 1,400:
%ΔQ = 400 ÷ 1,200 × 100
= 33.3333%
PES = 3.5
Unit elastic supply. The price rises from 8 to 12 and the quantity from 400 to 600. Both change by 40% of their average:
= 1
Inelastic supply. The price rises from 100 to 120 and the quantity from 500 to 540:
%ΔQ = 40 ÷ 520 × 100 = 7.6923%
PES = 0.4231
Perfectly inelastic supply. A venue has 300 seats. The ticket price rises from 50 to 70 and the number of seats stays at 300, so the quantity change is 0% and the PES is 0.
What Makes Supply Elastic or Inelastic?
- Time. The longer producers have to respond, the more they can change output.
- Spare capacity. A factory running at half speed can raise output quickly. One at full capacity cannot.
- Stocks. Goods that store well can be released from inventory when the price rises.
- Production time. Printed T-shirts take hours, apartments take years and vineyards take longer still.
- Mobility of inputs. If workers and machines can switch between products easily, supply is more elastic.
- Scarce inputs. Supply stays inelastic when a key input, such as land in a city centre, cannot be increased.
Short Run vs Long Run
Time is usually the biggest factor. Suppose the price of wheat rises from 200 to 240 a tonne and a region was supplying 1,000 tonnes. Within one season farmers can only work their planted fields harder. Over three years they can plant more land:
| Time allowed | New quantity | PES |
|---|---|---|
| One season | 1,040 | 0.2157 |
| Three years | 1,300 | 1.4348 |
The same price rise gives inelastic supply in the short run and elastic supply in the long run. When you quote a PES, say what period it covers.
Price Elasticity of Supply vs Demand
| PES | PED | |
|---|---|---|
| Measures | Sellers | Buyers |
| Curve | Supply | Demand |
| Usual sign | Positive | Negative |
| Main driver | Time | Substitutes |
Both use the same midpoint formula. Price elasticity of demand (PED) uses the quantity bought, which normally falls when the price rises, so it comes out negative. PES uses the quantity supplied, which normally rises.
Common Mistakes
- Dividing the wrong way round. Quantity change goes on top and price change underneath.
- Using changes in units. 100 loaves ÷ 4 is a slope, not an elasticity. Convert both changes to percent first.
- Mixing methods. Use the midpoint for both changes or the start point for both, never one of each.
- Using sales data where supply shifted. The formula assumes only the price changed. If costs, technology or weather changed too, the result is not a true PES.
- Treating PES as fixed. It changes with the time allowed and with how close producers are to full capacity.
The result is for education and planning and is not economic or financial advice.
Key Terms
- Price elasticity of supply
- Percentage change in quantity supplied divided by percentage change in price.
- Quantity supplied
- The amount producers are willing to sell at a given price.
- Midpoint method
- Measuring each percentage change from the average of the two values.
- Elastic supply
- PES above 1: quantity responds more than in proportion to price.
- Inelastic supply
- PES below 1: quantity responds less than in proportion to price.
- Unit elastic
- PES of 1: quantity and price change by the same percentage.
How to Use the Price Elasticity of Supply Calculator
- Enter the initial price. Type the price per unit before the change, such as 8.
- Enter the initial quantity. Type the quantity supplied at the initial price, such as 450.
- Enter the new price. Type the price per unit after the change, such as 12.
- Enter the new quantity. Type the quantity supplied at the new price, such as 550.
- Read and copy the result. The price elasticity of supply appears as you type, with the percentage changes, the type of supply and the start-point figure. Press Copy to copy it, or Clear or Esc to start again.
Example: the price rises from 20 to 22 and the quantity supplied from 1,000 to 1,400. The result is 3.5, so supply is elastic.
Who Can Use This Calculator?
Frequently Asked Questions (FAQs)
How do you calculate price elasticity of supply?
Divide the percentage change in quantity supplied by the percentage change in price. With the midpoint method, each percentage change is the change divided by the average of the old and new values, times 100.
What is the price elasticity of supply formula?
PES = % change in quantity supplied ÷ % change in price. With the midpoint method, % change in quantity = (Q2 − Q1) ÷ ((Q1 + Q2) ÷ 2) × 100 and % change in price = (P2 − P1) ÷ ((P1 + P2) ÷ 2) × 100.
What is the PES if the price rises from 8 to 12 and the quantity supplied rises from 450 to 550?
It is 0.5. The price changes by 40% of its average and the quantity by 20% of its average, so PES = 20% ÷ 40% = 0.5. Supply is inelastic.
What does a price elasticity of supply of 0.5 mean?
It means a 1% rise in price leads to about a 0.5% rise in the quantity supplied. Because the value is below 1, supply is inelastic.
When is supply elastic or inelastic?
Supply is elastic when PES is above 1, inelastic when PES is below 1 and unit elastic when PES equals 1. A PES of 0 is perfectly inelastic supply.
Can price elasticity of supply be negative?
Not along a normal supply curve, because producers supply more at a higher price. A negative result from real data usually means supply itself shifted, for example because costs rose.
Why use the midpoint method?
It gives the same elasticity whether the price rises or falls between the two points. The start-point method gives two different answers for the same pair of points.
What makes supply more elastic?
More time to respond, spare production capacity, goods that can be stored, short production times and inputs that move easily between uses all make supply more elastic.
Is the Price Elasticity of Supply Calculator free?
Yes. It is free to use, with no sign-up and no limit on how many times you use it.
Sources
- Wikipedia. Price elasticity of supply.
- OpenStax. Principles of Economics 3e, 5.1 Price Elasticity of Demand and Price Elasticity of Supply.
- OpenStax. Principles of Economics 3e, 5.2 Polar Cases of Elasticity and Constant Elasticity.
- Lumen Learning. Calculating Price Elasticities Using the Midpoint Formula.
- WallStreetMojo. Price Elasticity of Supply.
- Wikipedia. Arc elasticity.
Try our Price Elasticity of Supply Calculator to see how strongly supply responds to any price change.