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Unformatted text preview: This is used for farmers demands for a product if theyre price-takers. They can sell a good for a fixed price. o Price Elasticity of Supply: Measures the price sensitivity of sellers. o SI is much more elastic than the other one, which is relatively inelastic. Two Extremes: o 1. If the supply curve is perfectly horizontal, its elastic. o 2. If the supply curve is perfectly vertical, its inelastic. This is very common. The reason why this one is so important is because its common. It means that the quantity supplied is constant and independent of price. IE: Land looks like this. Certain amount of land out there, regardless of price. o In the long run, the economy can only produce so much stuff. How much we can produce depends on our productive capabilities....
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This note was uploaded on 04/24/2009 for the course ECON 2105h taught by Professor Staff during the Spring '08 term at University of Georgia Athens.
- Spring '08
- Price Elasticity