Question

Differentiate between Joint supply and competitive supply

2) Explain any four determinants of elasticity of supply


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Answer 1

Answer:

ɪ) ᴊᴏɪɴᴛ sᴜᴘᴘʟʏ ᴏᴄᴄᴜʀs ᴡʜᴇɴ ᴛᴡᴏ ᴏʀ ᴍᴏʀᴇ ᴄᴏᴍᴍᴏᴅɪᴛɪᴇs ᴀʀᴇ ᴘʀᴏᴅᴜᴄᴇᴅ ᴀɴᴅ sᴜᴘᴘʟɪᴇᴅ ғʀᴏᴍ ᴏɴᴇ sᴏᴜʀᴄᴇ sᴜᴄʜ ᴛʜᴀᴛ ᴛʜᴇ sᴜᴘᴘʟʏ ᴏғ ᴏɴᴇ ᴄᴏᴍᴍᴏᴅɪᴛʏ ᴡɪʟʟ ʟᴇᴀᴅ ᴛᴏ ᴛʜᴇ sᴜᴘᴘʟʏ ᴏғ ᴛʜᴇ ᴏᴛʜᴇʀ(s). ᴄᴏᴍᴘᴇᴛɪᴛɪᴠᴇ sᴜᴘᴘʟʏ ᴏɴ ᴛʜᴇ ᴏᴛʜᴇʀ ʜᴀɴᴅ ᴏᴄᴄᴜʀs ᴡʜᴇɴ ᴀ ᴄᴏᴍᴍᴏᴅɪᴛʏ ʜᴀs ᴀʟᴛᴇʀɴᴀᴛɪᴠᴇ ᴜsᴇs.

ɪɪ) ᴘʀɪᴄᴇ ᴇʟᴀsᴛɪᴄɪᴛʏ ᴏғ sᴜᴘᴘʟʏ ᴍᴇᴀsᴜʀᴇs ᴛʜᴇ ᴅᴇɢʀᴇᴇ ᴏғ ʀᴇsᴘᴏɴsɪᴠᴇɴᴇss ᴏғ ᴛʜᴇ ǫᴜᴀɴᴛɪᴛʏ sᴜᴘᴘʟɪᴇᴅ ᴏғ ᴀ ᴄᴏᴍᴍᴏᴅɪᴛʏ ᴛᴏ ᴀ ᴄʜᴀɴɢᴇ ɪɴ ɪᴛs ᴘʀɪᴄᴇ. ɪᴛ ᴍᴇᴀsᴜʀᴇs ᴛʜᴇ sᴇɴsɪᴛɪᴠɪᴛʏ ᴏғ ᴛʜᴇ ǫᴜᴀɴᴛɪᴛʏ sᴜᴘᴘʟɪᴇᴅ ᴛᴏ ᴀ ᴄʜᴀɴɢᴇ ɪɴ ᴛʜᴇ ᴘʀɪᴄᴇ. ᴍᴏʀᴇ ᴘʀᴇᴄɪsᴇʟʏ, ᴘʀɪᴄᴇ ᴇʟᴀsᴛɪᴄɪᴛʏ ᴏғ sᴜᴘᴘʟʏ ɪs ᴅᴇғɪɴᴇᴅ ᴀs ᴛʜᴇ ᴘʀᴏᴘᴏʀᴛɪᴏɴᴀᴛᴇ ᴄʜᴀɴɢᴇ ɪɴ ǫᴜᴀɴᴛɪᴛʏ sᴜᴘᴘʟɪᴇᴅ ᴏғ ᴀ ᴄᴏᴍᴍᴏᴅɪᴛʏ / ᴀ ɢɪᴠᴇɴ ᴘʀᴏᴘᴏʀᴛɪᴏɴᴀᴛᴇ ᴄʜᴀɴɢᴇ ɪɴ ɪᴛs ᴘʀɪᴄᴇ.

ɪᴛ ᴍᴀʏ ʙᴇ ᴇxᴘʀᴇssᴇᴅ ᴀs ᴡʜᴇʀᴇ, ᴇs sᴛᴀɴᴅs ғᴏʀ ᴇʟᴀsᴛɪᴄɪᴛʏ ᴏғ sᴜᴘᴘʟʏ.

ᴅᴇᴛᴇʀᴍɪɴᴀɴᴛs ᴏғ ᴇʟᴀsᴛɪᴄɪᴛʏ ᴏғ sᴜᴘᴘʟʏ:

→ɴᴀᴛᴜʀᴇ ᴏғ ᴄᴏsᴛ ᴏғ ᴘʀᴏᴅᴜᴄᴛɪᴏɴ: ᴇʟᴀsᴛɪᴄɪᴛʏ ᴏғ sᴜᴘᴘʟʏ ᴅᴇᴘᴇɴᴅs ᴜᴘᴏɴ ᴄʜᴀɴɢᴇ ɪɴ ᴛʜᴇ ᴄᴏsᴛ ᴏғ ᴘʀᴏᴅᴜᴄɪɴɢ ᴀᴅᴅɪᴛɪᴏɴᴀʟ ǫᴜᴀɴᴛɪᴛʏ ᴏғ ᴏᴜᴛᴘᴜᴛ. ɪғ ᴀɴ ɪɴᴄʀᴇᴀsᴇ ɪɴ ᴏᴜᴛᴘᴜᴛ ʙʏ ᴛʜᴇ ғɪʀᴍs ɪɴ ᴀɴ ɪɴᴅᴜsᴛʀʏ ᴄᴀᴜsᴇs ᴏɴʟʏ ᴀ sʟɪɢʜᴛ ɪɴᴄʀᴇᴀsᴇ ɪɴ ᴛʜᴇɪʀ ᴄᴏsᴛ ᴘᴇʀ ᴜɴɪᴛ ᴏʀ ʟᴇᴀᴅs ᴛᴏ ᴅᴇᴄʀᴇᴀsᴇ ɪɴ ᴄᴏsᴛ ᴘᴇʀ ᴜɴɪᴛ, ᴡᴇ ᴡᴏᴜʟᴅ ᴇxᴘᴇᴄᴛ sᴜᴘᴘʟʏ ᴛᴏ ʙᴇ ғᴀɪʀʟʏ ᴇʟᴀsᴛɪᴄ. ɪғ, ᴏɴ ᴛʜᴇ ᴏᴛʜᴇʀ ʜᴀɴᴅ, ɪɴᴄʀᴇᴀsᴇ ɪɴ sᴜᴘᴘʟʏ ʟᴇᴀᴅs ᴛᴏ ᴀ ʟᴀʀɢᴇ ɪɴᴄʀᴇᴀsᴇ ɪɴ ᴄᴏsᴛ ᴏғ ᴘʀᴏᴅᴜᴄᴛɪᴏɴ, ᴛʜᴇ sᴜᴘᴘʟʏ ᴡᴏᴜʟᴅ ʙᴇ ʀᴇʟᴀᴛɪᴠᴇʟʏ ɪɴᴇʟᴀsᴛɪᴄ.

→ ᴛɪᴍᴇ ᴇʟᴇᴍᴇɴᴛ: ᴛɪᴍᴇ ᴘᴇʀɪᴏᴅ ɪs ᴀɴ ɪᴍᴘᴏʀᴛᴀɴᴛ ᴅᴇᴛᴇʀᴍɪɴᴀɴᴛ ᴏғ ᴇʟᴀsᴛɪᴄɪᴛʏ ᴏғ sᴜᴘᴘʟʏ. sᴜᴘᴘʟʏ ᴏғ ᴀ ᴄᴏᴍᴍᴏᴅɪᴛʏ, ɪɴ ᴛʜᴇ ᴜʟᴛɪᴍᴀᴛᴇ ᴀɴᴀʟʏsɪs, ᴅᴇᴘᴇɴᴅs ᴜᴘᴏɴ ɪᴛs ᴘʀᴏᴅᴜᴄᴛɪᴏɴ. ᴀ ᴘʀɪᴄᴇ ᴄʜᴀɴɢᴇ ᴅᴜᴇ ᴛᴏ ᴄʜᴀɴɢᴇ ɪɴ ᴅᴇᴍᴀɴᴅ ғᴏʀ ᴀ ᴄᴏᴍᴍᴏᴅɪᴛʏ ᴍᴀʏ ʜᴀᴠᴇ ᴀ sᴍᴀʟʟ ʀᴇsᴘᴏɴsᴇ ɪɴ ᴛʜᴇ ǫᴜᴀɴᴛɪᴛʏ sᴜᴘᴘʟɪᴇᴅ ɪɴ ᴛʜᴇ sʜᴏʀᴛ-ʀᴜɴ sɪɴᴄᴇ ᴛʜᴇ ᴘʀᴏᴅᴜᴄᴛɪᴏɴ ᴄᴀᴘᴀᴄɪᴛʏ ᴍᴀʏ ʙᴇ ʟɪᴍɪᴛᴇᴅ.

→ɴᴀᴛᴜʀᴇ ᴏғ ᴛʜᴇ ᴄᴏᴍᴍᴏᴅɪᴛʏ: ɴᴀᴛᴜʀᴇ ᴏғ ᴛʜᴇ ᴄᴏᴍᴍᴏᴅɪᴛʏ ɪs ᴀʟsᴏ ᴀɴ ɪᴍᴘᴏʀᴛᴀɴᴛ ᴅᴇᴛᴇʀᴍɪɴᴀɴᴛ ᴏғ ᴛʜᴇ ᴇʟᴀsᴛɪᴄɪᴛʏ ᴏғ sᴜᴘᴘʟʏ. ғᴏʀ ɪɴsᴛᴀɴᴄᴇ, ᴛʜᴇ sᴜᴘᴘʟʏ ᴏғ ᴅᴜʀᴀʙʟᴇ ᴘʀᴏᴅᴜᴄᴛs ɪs ʀᴇʟᴀᴛɪᴠᴇʟʏ ᴇʟᴀsᴛɪᴄ. ᴅᴜʀᴀʙʟᴇ ɢᴏᴏᴅs ᴄᴀɴ ʙᴇ sᴛᴏʀᴇᴅ ᴀɴᴅ ʜᴇɴᴄᴇ ᴘʀᴏᴅᴜᴄᴇʀs ᴄᴀɴ ᴍᴇᴇᴛ ᴛʜᴇ ᴍᴀʀᴋᴇᴛ ᴅᴇᴍᴀɴᴅ ʙʏ ʀᴜɴɴɪɴɢ ᴅᴏᴡɴ ᴛʜᴇɪʀ sᴛᴏᴄᴋs.

→ɴᴀᴛᴜʀᴇ ᴏғ ɪɴᴘᴜᴛs: ᴇʟᴀsᴛɪᴄɪᴛʏ ᴏғ sᴜᴘᴘʟʏ ᴅᴇᴘᴇɴᴅs ᴏɴ ᴛʜᴇ ɴᴀᴛᴜʀᴇ ᴏғ ɪɴᴘᴜᴛs ᴜsᴇᴅ ғᴏʀ ᴛʜᴇ ᴘʀᴏᴅᴜᴄᴛɪᴏɴ ᴏғ ᴀ ᴄᴏᴍᴍᴏᴅɪᴛʏ. ɪғ ᴛʜᴇ ᴘʀᴏᴅᴜᴄᴛɪᴏɴ ᴏғ ᴀ ᴘʀᴏᴅᴜᴄᴛ ʀᴇǫᴜɪʀᴇs ɪɴᴘᴜᴛs ᴛʜᴀᴛ ᴀʀᴇ ᴇᴀsɪʟʏ ᴀᴠᴀɪʟᴀʙʟᴇ, ɪᴛs sᴜᴘᴘʟʏ ᴡᴏᴜʟᴅ ʙᴇ ᴍᴏʀᴇ ᴇʟᴀsᴛɪᴄ. ᴏɴ ᴛʜᴇ ᴏᴛʜᴇʀ ʜᴀɴᴅ, ɪғ ɪᴛ ᴜsᴇs sᴘᴇᴄɪᴀʟɪsᴇᴅ ɪɴᴘᴜᴛs, ɪᴛs sᴜᴘᴘʟʏ ᴡɪʟʟ ʙᴇ ʀᴇʟᴀᴛɪᴠᴇʟʏ ɪɴᴇʟᴀsᴛɪᴄ.