Price elasticity of supply and the slope of the slope curve, Managerial Economics

PRICE ELASTICITY OF SUPPLY AND THE SLOPE OF THE SLOPE CURVE

1463_price elasticity of supply.png

For a straight line supply curve, the gradient is constant along the whole length of the curve, but elasticity is not necessarily constant.  However, at any given point the steeper the supply curve, the more inelastic will be the supply.  For this reason, steeply sloped supply curves are usually associated with inelastic supply and non-steeply sloped supply curves are usually associated with elastic supply.

In the first diagram, when price increases from P1 to P2, quantity supplied increases in less proportion from q1 to q2.  Conversely, when price falls from P2 to P1, quantity supplied falls in less proportion from q2 to q1.

In the second diagram, when price rises from P11 to P21, quantity supplied rises in greater proportion from q11 to q21, and when price falls from P21 to P11, quantity supplied falls in greater proportion from q21 to q11.

Posted Date: 11/27/2012 6:47:26 AM | Location : United States







Related Discussions:- Price elasticity of supply and the slope of the slope curve, Assignment Help, Ask Question on Price elasticity of supply and the slope of the slope curve, Get Answer, Expert's Help, Price elasticity of supply and the slope of the slope curve Discussions

Write discussion on Price elasticity of supply and the slope of the slope curve
Your posts are moderated
Related Questions
Question 1: Explain the central theme of Scientific Management. Do you think that the scientific management enhances productivity in the organization? Give your arguments.

Discount Rate (Bank Rate) This is the rate on central bank advances and is also called official discount rate or "minimum lending rate".  When commercial banks find themselves

Diminishing Marginal Utility Diminishing marginal utility as well is to be held responsible for the rise in demand for a product when its price declines. When an individual pur

Can identity economics explain some patterns observed in the Australian economy

Environmental issues factors This is governed by the below factors:  The type of economic system of the country Business cycles Industrial policy of the countr

In the short-run the firm can't modify or change overhead factors like equipment, plant and scale of its organisation. In the short-run output can be decreased or increased by chan

is indian companies running a risk by not giving attention to cost cutting?


One lumber producer may locate a plant in the same area.  If it does, there will be more competition for labor and the labor supply function facing Northern will shift to