101 Class 14 W2008

# Belastic p 0 belastic slope pq 1belastic 0 p2 p1 p

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Unformatted text preview: lastic supply P P2 Qs = a + binelastic P 0 < binelastic < belastic P Slope = P/Q = 1/binelastic > 0 P1 Q1 Q Q2 Q Perfectly inelastic supply P P2 Qs = a b = 0 Slope is not defined P1 a Q2 Q Supply as a function of many variables Example: Qs = 100 + 2 P + 10 x 12 y + 2P: quantity supplied increases as P increases i.e. supply curve is upward sloping Every \$1 increase in price > 2 unit increase in quantity supplied Coefficient is a measure of sensitivity of quantity supplied to changes in P Supply as a function of many variables Example: Qs = 100 + 2 P + 10 x 12 y + 10 x : quantity supplied increases as x increases What might x be? Increasing x will shift the supply curve to the right Coefficient is a measure of sensitivity: a large coefficient > large shift in the supply curve Productivity index Measure of technology Index of some favorable environmental factor Level of training for workforce etc. Supply as a function of many variables Example: Qs = 100 + 2 P + 10 x 12 y 12 y: quanti...
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