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elasticity of supply

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Ba Mai Khac

on 25 April 2013

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Transcript of elasticity of supply

I/The price elasticity of supply( PES or Es) is a measure of how much the quantity supplied of a good responds to a change in the price of that good, computed as the percentage change in quantity supplied divided by the percentage change in price. III/The variety of supply curves: The price elasticity of supply measures the responsiveness of quantity supplied to the price, it is reflected in the appearance of the supply curve. Elasticity of supply The elasticity of supply measures the responsiveness of the quantity supplied to a change in the price of a good, with all other factors remaining the same. II/ COMPUTING THE PRICE ELASTICITY OF SUPPLY Economists compute the price elasticity of supply as the percentage
change in the quantity supplied divided by the percentage change in the price.
That is,
Price elasticity of supply = Percentage change in quantity supplied /Percentage change in price
( PES or Es)


For example, presume that a hike in the price of milk from $10 to $12 a gallon raises the amount
that dairy farmers manufacture from 15000 to 20000 gallons per month. we culculate the
percentage change in price as quantity= a+ (b x Price) Hello everybody^^ Price($) Quantity supplied
1 12
2 28
3 42
4 52
5 60 Supply Schedule where a and b are constant for each supply curve price ($) Quantity HCE IV/ Summary 0 100 4 125 5 c b a ELASTICITY OF SUPPLY The price elasticity of supply depends on the flexibility of sellers to change the amount of the good they produce. In most markets, a key determinant of the price elasticity of supply is the time period being considered.
_The price elasticity of supply measures how much the quantity supplied responds to changes in the price.
_ The price elasticity of supply is calculated as the percentage change in quantity supplied divided by the percentage change in price. If the elasticity is less than 1, so that quantity supplied moves proportionately less than the price, supply is said to be inelastic. If the elasticity is greater than 1, so that quantity supplied moves proportionately more than the price, supply is said to be elastic.
_ The tools of supply and demand can be applied in many different kinds of markets. Nhóm 13
1/ Nguyen Thi Bich Thao

2/ Nguyen Hoang Huong Giang

3/ Mai Khac Ba THANKS FOR YOUR LISTENING
:) (a) Perfectly Inelastic Supply: Elasticity Equals 0 (b) Unit Elastic Supply: Elasticity Equals 1 (c) Perfectly Elastic Supply: Elasticity Equals Infinity
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