Explain the three factors that effect the elasticity of supply
Answers
There are several factors that affect the supply elasticity of a good or service, such as the availability of resources, innovation of technology and the amount of producers. ... This increases the price due to scarcity of the good or service, and the elasticity of supply is affected.
Answer:
Price elasticity of supply is entirely influenced by the type of item, the cost of producing extra units, and the time frame.
Explanation:
Price elasticity of supply is entirely influenced by the type of item, the cost of producing extra units, and the time frame.
Commodity's Nature - This describes the nature of the good and whether it has a short-term or long-term usage.
• Production costs for more units of a good - Lower production costs for extra units will help the producer make more money.
• Time Period - The supply of products over a short period is inelastic, whereas it is elastic over a long period.
A commodity's price and supply are intimately correlated.
A good or service's responsiveness to supply following a change in its market price is measured by its price elasticity of supply. Basic economic theory states that when a good's price grows, so will its supply. A good's supply will fall when its price rises, on the other hand.
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