1.2.4 + 1.2.5 Supply + Elasticity of supply Flashcards
What is supply
the amount that producers are willing and able to sell at any given price in a given time
Whats the supply curve
Shows the relationship between price and quantity supplied
Slopes upwards as price rises so does supply
Rational profit maximising producers
What are the some causes of shifts in supply
-Production costs
-Tech of production
-Taxes and subsidies
-Number of firms in industry
What is PES
Price elasticity of supply
Measures responsiveness of supply to a change in price
Whats the equation for PES
% change supplied / % change price
What is perfectly inelastic supply
0
Whatever price supply stays the same
What is inelastic supply
0-1
less than proportionate response of supply to a change in price
What is unitary supply
1
% change in supply is equal to % change in price
What is elastic supply
1- infinity
more than proportionate response of supply to a change in price
What is perfectly elastic supply
infinity
A price change will cause no supply
What are the factors affecting elasticity of supply
-available resources
-mobile factors
-capacity of production
-length and complexity
-short/ long run
What makes a product more inelastic
Complex and short run
harder to increase production
What makes a product more elastic
Easy and long run
can increase production
What are examples of perfectly inelastic supply
Fixed supply- antiques, period property, Olympics tickets
Short/ Long run- football season tickets
