Figure presents a numerical example of this phenomenon. When the price
rises from $3 to $4 (a 29 percent increase, according to the midpoint method), the
quantity supplied rises from 100 to 200 (a 67 percent increase). Because quantity
supplied moves proportionately more than the price, the supply curve has elasticity
greater than 1. By contrast, when the price rises from $12 to $15 (a 22 percent increase),
the quantity supplied rises from 500 to 525 (a 5 percent increase). In this
case, quantity supplied moves proportionately less than the price, so the elasticity
is less than 1.
rises from $3 to $4 (a 29 percent increase, according to the midpoint method), the
quantity supplied rises from 100 to 200 (a 67 percent increase). Because quantity
supplied moves proportionately more than the price, the supply curve has elasticity
greater than 1. By contrast, when the price rises from $12 to $15 (a 22 percent increase),
the quantity supplied rises from 500 to 525 (a 5 percent increase). In this
case, quantity supplied moves proportionately less than the price, so the elasticity
is less than 1.
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