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 employment, 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 usually inelastic. This means that the quantity supplied is not very responsive to changes in price. In the short run, firms may have limited ability to adjust their production levels due to fixed factors of production, such as capital or specialized labor.
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, firms have more flexibility to adjust their production levels by varying all factors of production, including capital, labor, and technology.
Overall, the time period of employment affects the price elasticity of supply, with short-run supply being relatively inelastic and long-run supply being more elastic.