Supply elasticities pt2

Question 1

Economic boom

Answer 1

When demand for goods are very high and firms are running out of goods

Question 2

Unit elastic (=1)

Answer 2

Whatever % change in price is, % change in quantity supplied will be the same

Question 3

PES formula

Answer 3

% change in quantity supplied / % change in price

Question 4

Factors influencing PES

Answer 4

Technology (allows for more efficient production at lower cost)
Resources (if scarce resources needed to produce product, may not be able to increase production)
Competitors (more suppliers make prices more elastic, more competition)

Question 5

Short run

Answer 5

Time period where at least 1 FOP (usually capital because it takes time to build additional factories) is fixed. It often takes time to increase production in the short run so supply in the SR tends to be inelastic (not as responsive to changes)

Question 6

Long run

Answer 6

Time period where all FOP are variables. Able to increase capacity and supply in the long run tend to be elastic (has a longer time to react).

Question 7

Elasticities diagram

Answer 7

https://docs.google.com/document/d/1YLC5NGt8S_m4u6mb6AjbV7Ougmcdq6uhg92klg_P9qo/edit