The law of supply states that the quantity supplied of a commodity varies directly with its price. A high price would lead to higher supply and the low price would reduce the supply. Thus as price changes, the supply also changes, but it is not necessary that the supply of the commodity changes in the same proportion as the change in price. The supply may infect increase more than proportionately or less than proportionately with a given change in price. Thus, the degree of change in the supply of commodities. This degree of case of different commodities. This degree of change in the supply of a commodity with the change in its price is called the elasticity of supply. In other words, the elasticity is the response of supply to the changes in the price. If the changes in price do not produce any change in the supply of a commodity, this is called inelastic supply.
When the supply is inelastic, the supply curve takes the shape of a straight line parallel to the Y-axis as in the price may be same. This is the situation in the market during very short period (market period) when the supply is equal to what has come to the market on the particular day. It cannot be increased or decreased.SUBMIT ASSIGNMENT NOW!