Write short note on Elasticity of supply.
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Elasticity of supply measures the degree of responsiveness of quantity supplied to a change in own price of the commodity. It is also defined as the percentage change in quantity supplied divided by percentage change in price.
It can be calculated by using the following formula:
ES = % change in quantity supplied/% change in price
Symbolically,
ES = ∆Q/Q ÷ ∆P/P = ∆Q/∆P × P/Q
Examples of inelastic goods would be water, gasoline, housing, and food. Elasticgoods are usually viewed as luxury items.
It can be calculated by using the following formula:
ES = % change in quantity supplied/% change in price
Symbolically,
ES = ∆Q/Q ÷ ∆P/P = ∆Q/∆P × P/Q
Examples of inelastic goods would be water, gasoline, housing, and food. Elasticgoods are usually viewed as luxury items.
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Supply elasticity is defined as the measure of responsiveness of a company or producer to change in demand for its products.
The general rule of it is that if price rises, the supply will also rise. It depends upon the following factors:
i) The availability of critical resources.
ii) Technology innovation.
iii) Number of competitors producing the same product and service.
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