Unit elasticity of supply, Managerial Economics

Assignment Help:

Unit Elasticity of Supply

Supply is said to be of unit elasticity if changes in price bring about changes in quantity supplied in the same proportion.  Thus, when price rises, quantity supplied increases in the same proportion, and when price falls, quantity supplied falls in the same proportion.  The supply curve is a straight line through the origin, and the elasticity of supply is equal to one or unity.

When price rises from P1 to P2, quantity supplied increases in the same proportion from q1 to q2.  This is the case of a commodity of which there is a fair amount of stocks or which can be produced within a fairly short period of time.

Conversely, when price falls from P2 to P1, quantity supplied falls in the same proportion from q2 to q1.  This is the case of a commodity which is fairly easily stockable, e.g. dry foods, like dry beans and dry maize.


Related Discussions:- Unit elasticity of supply

Comparability principle, The comparability principle Associations repre...

The comparability principle Associations representing workers providing services - clerical, postal, teaching, etc. - have always attempted to  apply the "principle of comparab

Managerial economics helps create utility for the society, The theory of co...

The theory of consumer's behavior seeks to explain the determination of consumer's equilibrium. Consumer's equilibrium refers to a situation when a consumer gets maximum satisfacti

Assignment question, define scarcity and opportunity cost.Show how these co...

define scarcity and opportunity cost.Show how these concept are useful in managerial decision making

Eco, distinguish between industry demand and firm company demand

distinguish between industry demand and firm company demand

Demerits of direct taxes, Demerits of direct taxes a. Heavy direct tax...

Demerits of direct taxes a. Heavy direct taxation, especially when closely linked to current earnings, can act as a serious check to productivity by encouraging absenteeism

Capital budgeting risk, business decision making concepts of certainity ris...

business decision making concepts of certainity risk unertainity sources of business risk steps invoived in analysiis of risky decisions risk adjustment etc

Determinants of money supply, DETERMINANTS OF MONEY SUPPLY The total su...

DETERMINANTS OF MONEY SUPPLY The total supply of nominal money in the economy is determined by the joint behaviour of the central bank which controls the total issue of the hig

Short-run and long-run, 1. Explain the industry and describe the general pa...

1. Explain the industry and describe the general pattern of change of the particular market model. 2. Hypothesize the basic short-run and long-run behaviours of the model in the

Elasticity of demand, Definition of Elasticity Is defined as the ratio...

Definition of Elasticity Is defined as the ratio of the relative change of one (dependent) variable to changes in another (independent) variable, or it's a percentage change o

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