3000 2100 2000 1000 sb a small small price rise

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Unformatted text preview: l price Small change and large quantity change change An increase in demand brings ... 30.00 21.00 20.00 10.00 Sb … a small small price rise... … and a large and quantity increase D1 D0 0 5 10 15 20 25 Quantity (pizzas per hour) Price Elasticity of Supply Price • elastic supply – a % change in a product’s price causes a greater % change in the quantity supplied • inelastic supply – a % change in a product’s price causes a smaller % change in the quantity supplied Price Perfectly Inelastic Supply Perfectly S1 Elasticity of Elasticity supply = 0 Quantity supplied is Quantity the same for any price! price! 0 Quantity Price Unit Elastic Supply Unit S1 Elasticity of Elasticity supply = 1 S2 0 Quantity Price Perfectly Elastic Supply Perfectly Elasticity of Elasticity supply = ∞ S3 Suppliers will offer ANY quantity at this price 0 Quantity Factors That Affect Supply Elasticity • Resource substitution • Time frame – Momentary- none of the required resources can be varied – short run - at least one of the required resources can be varied – long run - all of the required resources can be varied...
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This document was uploaded on 03/13/2014.

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