Econ chapter 4 (elasticity of supply)

Price Elasticity of Supply =

%change in quantity supplied/ %change in price (Q2-Q1)/Q2x100 over (P1-P2)/P2x100

Time Frame for Supply Decision 1. short-run supply 2. long-run supply

- The more time that passes after a price change, the greater is the elasticity of supply. 1. is relatively inelastic 2. is relatively elastic

Depends on the

-Resource substitution possibilities -Time frame for the supply decision

Which of the following statements is an example of *elasticity of supply​?*

A 10 percent fall in the price of turkey with no other change decreases quantity supplied by 12 percent.

Price Elasticity of Supply

Measures the *responsiveness* of the quantity supplied responds *to a change in the price* of good when *all other influences on selling plans remain the same.*

Resource Substitution Possibilities

The easier it is to substitute among the resources used to produce a good or service, the greater is its elasticity of supply

elasticity of supply

a​ units-free measure of the responsiveness of the quantity supplied of a good or service to a change in its​ price -we can compare the responsiveness of the same good when quantity is measured in different​ units, or we can compare across different goods

In the market for farm crops momentary supply is​ ______. In the market for farm​ crops, short-run supply is​ ______.

less elastic than​ short-run supply; less elastic than​ long-run supply

The elasticity of supply is calculated by dividing​ ______ by​ ______.

the percentage change in the quantity​ supplied; the percentage change in the price

Elasticity of supply measures the responsiveness of the quantity supplied to a change in​ ______, when all other influences on selling plans remain the same.

the price of a good

Goods and services that use rare resources in their production have a​ ______ elasticity of supply. The greater the amount of time available after a price​ change, the​ ______ is the elasticity of supply.

​low; greater

The momentary supply of wheat has an elasticity of supply equal to​ _______. The​ short-run supply of wheat has an elasticity of supply equal to​ _______.

​zero; more than zero but less than infinity