Unformatted text preview: obvious from the fact that supply is a direct function of price: and both quantity and price change in the same direction . This will be clear from the following example . The values of ‘q’ and ‘P’ have been selected from the supply schedule given above. The elasticity of supply also shows variations in its value for different commodities. Accordingly supply elasticity for different goods can be unit , (e s = 1) more than one (e s > 1) or less than one (e s < 1). The goods can then be categorized as relatively elastic or inelastic in supply. Elasticity of supply is also of considerable practical importance in its policy applications ....
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- Fall '10
- Supply And Demand, inelastic type