The elasticity of supply is also a relationship between two variables, where the changes in the level of prices cause response change in the quantity supplied. The measure calculates the percentage change in the level of quantity supplied divide by the percentage change in the level of prices.

It calculates how much the sellers respond to the changes in the level of prices in the market.

When the elasticity of supply is less than 1, or inelastic, it means that the changes in the quantity supplied are relatively lower than the changes in the prices.

When the elasticity of supply is equal to 1, or unitary elastic, it means that the percentage change in the quantity supplied will be equal to the percentage change in the price levels.

When the elasticity of supply is more than 1, or elastic, it means than the response change in the quantity supplied will be relatively greater than the percentage change in the level of prices.

An example can be, if the price level of cars goes up by a certain percentage, it will induce the suppliers to supply more because now, they will earn more profit. If the increase in the price level is 10%, then if the quantity supplied increases by 5% then it is inelastic supply, if it increases by 10%, then it is unitary elastic supply, and if the quantity supplied is increased by 15% then, it will come under more than elastic supply.