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

Perfect competition, Perfect Competition   The model of perfect compe...

Perfect Competition   The model of perfect competition describes a market situation in which there are: i.         Many buyers and sellers to the extent that the supply of

Methods of demand forecast, No demand forecasting method is 100% accurate. ...

No demand forecasting method is 100% accurate. Collective forecasts develop precision and reduce the probability of huge mistakes.  Methods which relay on Qualitative Assessmen

The calculus of optimization, the demand for widgets(x) is given by: px=160...

the demand for widgets(x) is given by: px=160 -4x the production of widget has the following average variable cost: Avc=2x-20 fixed cost are 162 calculate the output level of widg

Manegerial discretion, How relevent is managerial dicretion in developing c...

How relevent is managerial dicretion in developing countries?

Factors influencing supply - prices of factors of production, Prices of the...

Prices of the factors of production As the prices of those factors of production used intensively by X producers rise, so do the firms' costs. This cause supply to fall as some

Economics homework, 1. A sporting goods company has hired a management cons...

1. A sporting goods company has hired a management consulting firm to analyze demand in 20 regional markets for one of its major products: a treadmill. The consultant uses data to

Bank deposit and credit creation, Bank Deposit Bank notes and coins to...

Bank Deposit Bank notes and coins together constitute the currency in circulation.  But they form only a part of the total money supply.  The larger part of the money supply i

Population size and demographic trends, POPULATION SIZE AND DEMOGRAPHIC TRE...

POPULATION SIZE AND DEMOGRAPHIC TRENDS a.      Changes in Population The people of a country are its consumers.  They provide the labour force for production.  A study of

What is an effective need of demand, What is an effective need of demand ...

What is an effective need of demand 1.  An Effective Need: Effective need demands that there must be a need supported by the capacity and readiness to shell out. Henceforth there

What is the significance of managerial economics, Significance of manageria...

Significance of managerial economics Industrial and Business enterprises aim at earning maximum proceeds. In order to attain this objective, a managerial executive has to take

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