Unformatted text preview: r hour) 20 Price Elasticity of Supply
Price (dollars per pizza) 40.00 30.00 21.00 20.00 10.00 An increase in demand brings ... Small price change and large quantity change
Sb ... a small price rise... ... and a large quantity increase D1 D0 0 5 10 15 Quantity (pizzas per hour) 20 25 Price Elasticity of Supply 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 Perfectly Inelastic Supply
Price S1 Elasticity of supply = 0 Quantity supplied is the same for any price! 0 Quantity Unit Elastic Supply
Price S1 Elasticity of supply = 1 S2 0 Quantity Perfectly Elastic Supply
Price Elasticity of 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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- Fall '14