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Elasticity Of Supply

Published on Nov 22, 2015

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PRESENTATION OUTLINE

ELASTICITY OF SUPPLY

A MEASURE OF THE WAY SUPPLIERS RESPOND TO A CHANGE IN PRICE

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ELASTICITY OF SUPPLY LABELS

  • Elastic
  • Inelastic
  • Unitary elastic
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When there is a popular product that is in short supply, the price may rise as a result. The manufacturers of that product will increase output (the supply) to keep up with the demand. The higher the elasticity of supply, the faster the supply will increase when demand and price increase.

FACTORS THAT AFFECT ELASTICITY OF SUPPLY

  • Spare production capacity
  • Stocks of finished products and components
  • The ease and cost of factor substitution
  • Time period and production speed
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