FIGURE 5 PRICE ELASTICITY OF SUPPLY
All three supply curves in this figure run through point a, but they respond differently when price changes from P0 to P1. Considering supply curve S1 first, when price changes, the percentage change in quantity supplied is smaller than the percentage change in price; thus, S1 is an inelastic supply curve. Curve S2 is a unitary elastic supply curve, because the percentage change in output is the same as the percentage change in price. For supply curve S3, the percentage change in output is greater than the percentage change in price, so S3 is elastic. Elastic linear supply curves cross the price axis, inelastic linear supply curves cross the quantity axis, and unitary elastic linear supply curves go through the origin.