Elastic supply, Managerial Economics

Assignment Help:

Elastic Supply

Supply is said to be price elastic if changes in price bring about changes in quantity supplied in greater proportion.  Thus, when price increases, quantity supplied increases in greater proportion.  The supply curve is not steeply sloped and the elasticity of supply is greater than one.

When price rises from P1 to P2, quantity supplied rises in greater proportion from q1 to q2.  This is the case when there are a lot of stocks of the commodity or the commodity can be produced within fairly short period of time so that when price rises, quantity supplied can be increased substantially.

Conversely, if price falls from P2 to P1, quantity supplied falls in greater proportion from q2 to q1.  This is the case of a commodity which is easily stockable e.g. manufactured articles.  When price falls, quantity supplied can be substantially reduced.  The commodity is then stored instead of being sold at a loss or for very reduced profit.


Related Discussions:- Elastic supply

ELASTICITY OF DEMAND, THE COMPANY WOULD TO INCREASE THE PRICE OF STEEL IT...

THE COMPANY WOULD TO INCREASE THE PRICE OF STEEL IT SELLS BY 6% THE MANAGEMENT FORECAST ED THAT INCOME WILL RISE BY 4% NEXT YEAR AND THAT PRICE OF ALUMINIUM WILL FALL BY 2%. IF THE

Explain measuring arc elasticity, The concept of point elasticity is applic...

The concept of point elasticity is applicable where change in price and the resulting change in quantity are infinite or small. Though, where change in price and consequent hunger

Nature and functions of money , Nature and Functions of Money The concep...

Nature and Functions of Money The concept of money is very difficult to define . it is belongs to the category of things which are not amenable to any single definition. It is p

PRICE CUTS FOR MEDICINE case study, 1. What kind of market structure is inv...

1. What kind of market structure is involved for the sale of medicines and vitamins? 2. What can be said about barriers to entry in this market? 3. Might there be a change in mar

What do you mean by market structure, Q. What do you mean by Market Structu...

Q. What do you mean by Market Structure? Market economy pricing is conditioned by market structure. There are various forms of market structures. Perfect competition is accorde

Costs for producing clealung, You own a pharmaceutical company that is spec...

You own a pharmaceutical company that is specialized in the manufacture of medicine for smokers. You newly patented an innovative drug called Clealung, which drastically reduces th

Marginal cost, Marginal Cost This is the increase in total...

Marginal Cost This is the increase in total cost resulting from the production of an extra unit of output.  Thus, if TC n   is the total cost of producing n

Show the long term goals - demand forecast, Q. Show the Long Term Goals - D...

Q. Show the Long Term Goals - Demand forecast? Long Term Goals:   If the demand forecast period is more than a year, in that scenario it's termed as long term forecast. Follow

Determine the theory of exchange and price theory, Determine the Theory of...

Determine the Theory of Exchange and  Price Theory Theory of Exchange is commonly called Price Theory. Price determination under various types of market conditions comes under

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd