Economics Elasticity Of Supply Questions
Price elasticity of supply refers to the responsiveness of the quantity supplied of a good or service to changes in its price. It measures the percentage change in quantity supplied divided by the percentage change in price.
In relation to the time period of consumption, the concept of price elasticity of supply can vary. In the short run, when the time period is relatively brief, the supply of a good or service is typically inelastic. This means that the quantity supplied is not very responsive to changes in price. In the short run, producers may have limited ability to adjust their production levels due to factors such as fixed inputs, production capacity constraints, or time required to adjust production processes.
On the other hand, in the long run, when the time period is more extended, the supply of a good or service tends to be more elastic. This means that the quantity supplied is more responsive to changes in price. In the long run, producers have more flexibility to adjust their production levels by making changes to inputs, expanding production capacity, or adopting new technologies.
Overall, the time period of consumption plays a crucial role in determining the price elasticity of supply. In the short run, supply is relatively inelastic, while in the long run, supply becomes more elastic.