ECONOMICS
ELASTICITY OF DEMAND
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Elastic
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Inelastic
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Either A or B
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None of the above
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Detailed explanation-1: -If the inputs are easily available then the supply is elastic as it can be changed easily. On the other hand, if the availability of inputs is scarce then the supply tends to be inelastic.
Detailed explanation-2: -Supply is price elastic if the price elasticity of supply is greater than 1, unit price elastic if it is equal to 1, and price inelastic if it is less than 1.
Detailed explanation-3: -An increase in the number of suppliers makes the price of a product or service more elastic. If one supplier can’t meet demand, others will rush to fill the gap.
Detailed explanation-4: -Time. Over time price elasticity of supply tends to become more elastic, which means that producers would increase the quantity supplied by a larger percentage than an increase in price.
Detailed explanation-5: -If the price elasticity of supply is greater than 1, supply is elastic. If the price elasticity of supply equals 1, supply is unit elastic. If the price elasticity of supply is less than 1, supply is inelastic.