Economics Elasticity Of Supply Questions
The factors that determine the elasticity of supply are:
1. Availability of inputs: If inputs required for production are readily available, the supply will be more elastic. Conversely, if inputs are scarce or difficult to obtain, the supply will be less elastic.
2. Time period: In the short run, it is often difficult for producers to adjust their output levels, resulting in less elastic supply. In the long run, producers have more flexibility to adjust their production processes, leading to a more elastic supply.
3. Production capacity: If producers have excess production capacity, they can easily increase output in response to changes in demand, resulting in a more elastic supply. However, if production capacity is limited, the supply will be less elastic.
4. Mobility of resources: If resources, such as labor and capital, can easily move between different industries or regions, the supply will be more elastic. On the other hand, if resources are immobile, the supply will be less elastic.
5. Storage and perishability: If goods can be easily stored or have a longer shelf life, producers can adjust their supply more easily, leading to a more elastic supply. However, if goods are perishable or cannot be stored, the supply will be less elastic.
6. Government regulations: Government policies and regulations can affect the elasticity of supply. For example, if there are strict regulations or barriers to entry in a particular industry, the supply will be less elastic.