Economics Elasticity Of Supply Questions Medium
The concept of a relatively inelastic supply curve refers to a situation where the quantity supplied of a good or service is not very responsive to changes in price. In other words, even if there is a significant change in price, the quantity supplied does not change proportionately.
A relatively inelastic supply curve is represented by a steep slope, indicating that a small change in price leads to a relatively smaller change in quantity supplied. This occurs when the producers are unable to quickly adjust their production levels in response to price changes due to various factors such as limited resources, time constraints, or production capacity.
For example, let's consider the market for rare diamonds. The supply of rare diamonds is relatively inelastic because it takes a significant amount of time and effort to mine and process them. If the price of rare diamonds were to increase, the quantity supplied would not increase significantly in the short run because it is difficult to quickly increase diamond mining and production. Similarly, if the price were to decrease, the quantity supplied would not decrease significantly as it is not feasible to immediately reduce diamond production.
In summary, a relatively inelastic supply curve indicates that the quantity supplied is not very responsive to changes in price, implying that producers have limited ability to adjust their production levels in the short run.