Economics Elasticity Of Supply Questions
The difference between inelastic and unitary elastic supply lies in the responsiveness of quantity supplied to changes in price.
Inelastic supply refers to a situation where the quantity supplied is not very responsive to changes in price. This means that even if there is a significant change in price, the quantity supplied does not change much. In other words, the percentage change in quantity supplied is less than the percentage change in price. Inelastic supply is typically seen in goods or services that are difficult to produce or have limited availability.
On the other hand, unitary elastic supply refers to a situation where the percentage change in quantity supplied is equal to the percentage change in price. This means that the quantity supplied is equally responsive to changes in price. In other words, if there is a 10% increase in price, the quantity supplied will also increase by 10%. Unitary elastic supply is often observed in goods or services that have readily available substitutes and where producers can easily adjust their production levels.
Overall, the key difference between inelastic and unitary elastic supply is the degree of responsiveness of quantity supplied to changes in price. Inelastic supply is less responsive, while unitary elastic supply is equally responsive.