Economics Elasticity Of Supply Questions
The concept of price elasticity of supply refers to the responsiveness of the quantity supplied to a change in price. It measures the percentage change in quantity supplied divided by the percentage change in price.
In relation to the time period of technological change, the price elasticity of supply can vary. In the short run, when technological change is limited, the supply of a product may be relatively inelastic. This means that the quantity supplied does not change significantly in response to a change in price. This is because it takes time for producers to adjust their production processes and increase or decrease output.
However, in the long run, as technological advancements occur and producers have more time to adjust their production methods, the supply becomes more elastic. This means that the quantity supplied is more responsive to changes in price. Producers can adopt new technologies, improve efficiency, and increase or decrease production levels more easily.
Overall, the time period of technological change affects the price elasticity of supply. In the short run, supply may be relatively inelastic due to limited technological adjustments, while in the long run, supply becomes more elastic as producers have more time to adapt to technological changes.