Supply Flashcards
Elasitc PES
1-infifnty
Inelastic PES
0-0.99
Unitary elastic supply
Only elastic at the PES of 1
Unitary elastic supply
must start from the origin
Factors influencing PES
- Spare capacity
- state of the economy
- time period
- factors of production
- perishability
Spare capacity
capacity for production which isnt used
Spare capacity on elasticity
low spare capacity makes more inelastic supply
lots of spare capacity impact on PES
elastic
Not lots of spare capacity impact on PES
inelastic
availability of FOP Def
how easy it is to find the macros of production for a good
Elasticity of availability of FOP
more specialised fop leads to avalibility of fop
fop more inelastic
Supply
When a firms is willing and able to sell a good
Why do supply curves slope upward
Because the quantity supplied increases as price increases because at a higher price more firms are willing to supply
assumptions of supply curve
firms what to maximise prefer
why is the supply curve continually increasing
supply curve only considers the willingness of a firm to supply a good
What does the supply curve say about why prices increase
nothing
only tells us what would happen if the price increased
Extension
shift up a curve
Contraction
shift down a curve
price elasticity of supply
measure the responsiveness of OS to a change in price
EQ PED
%change in QD //// % change in Pricw
PES Eq
%change in QS // %change in price
All PES have what in common
they are all positive
All PED are positive or negative or both
negative
All XED or YED can be + or -
+ or -
Impact on bad state of economy on supply of a good
Elastic supply
Impact on good state of economy on supply of a good
inelastic
more factors of production are employed
How is elasticity of supply affeted by perishability
A perishable good can not easily be stockpiled and so a change in supply takes longer than a good which isnt perishable
How does time affect elasticity
In the short run FOP are fixed and so more elastic production however as factors aren’t fixed in the long run supply is less elastic
Factors affecting price elasticity of supply
- spare capacity
- availability of FOP
- state of the economy
- stockpiles and perishables
- time period
TEASS
Time
Economy
Avalability
Stockpiles
Spare capacity
Acronym for factors affecting Price elasticity of supply
TEASS
PES of 0 is what
Perfectly elastic supply
PES of infinity is what
perfectly elastic supply
Technology as a shift in supply
More advanced technology leads to an increase in supply and a shift left
what causes an increase in supply
new left or right supply curve
any factor bar price
Conditions of supply
Cost
Weather
Productivity
Technology
Supplies
Division of labour
when workers specialise on one task in the production line
