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Elasticity of Supply: Meaning, Types, Measurement and Determinants

What Is Price Elasticity?

❶This can be verified in this way. Learn the basics about it here.

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What Are the Major Determinants of Price Elasticity of Demand?

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Determinants/Factors of Price Elasticity of Supply: The main determinants/factors which determine the degree of price elasticity of supply are as under: (i) Time period. Time is the most significant factor which affects the elasticity of supply.

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Determinants of Price Elasticity of Supply. A numeric value that measures the elasticity of a good when the price changes. -availability of materials - The limited availability of raw materials could limit the amount of a product that can be produced.

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Like price elasticity of demand, price elasticity of supply is also dependent on many factors. Some of these factors are within the control of the organization whereas others may be beyond their control. Regardless of the control, if the management has knowledge about these factors, it can manage its supply better. Elasticity of supply measures the degree of responsiveness of quantity supplied to a change in own price of the commodity. It is also defined as the percentage change in quantity supplied divided by percentage change in price.

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The first determinant of price elasticity of supply is the existence of spare capacity. If there is high unit of stock in a company, it is able to respond to the change in demand quickly by supplying the stock to the market without raising the price. Then, the supply will be elastic. This opening module of the Power of Markets course covers the basic assumptions about market participants made by economists, the concept of opportunity cost, and the key determinants of supply and demand. We will then learn how to use the supply-demand framework to explain and predict market.