Economics Elasticity Of Supply Questions
The difference between elastic and unitary elastic supply lies in the responsiveness of quantity supplied to changes in price.
Elastic supply refers to a situation where a small change in price leads to a relatively larger change in quantity supplied. In other words, the supply is highly responsive to price changes. This occurs when producers can easily adjust their production levels in response to price fluctuations, such as in industries with low production costs or excess capacity.
On the other hand, unitary elastic supply occurs when a change in price leads to an equal proportional change in quantity supplied. In this case, the supply is neither highly responsive nor unresponsive to price changes. It indicates that producers are able to adjust their production levels in proportion to price changes, maintaining a constant supply elasticity.
In summary, elastic supply is highly responsive to price changes, while unitary elastic supply shows a proportional response to price changes.