ELASTICITY OF SUPPLY

ELASTICITY OF SUPPLY, TYPES AND IMPORTANCE. The elasticity of supply measures the ex to which the quantity of a commodity supplied by a producer changes as a result of a little change in the price of the commodity. Elasticity of Supply

The elasticity of supply may be defined as the degree of responsiveness of the quantity supplied of a commodity to change in the price of a commodity

What is elasticity of demand?

The elasticity of supply measures the ex to which the quantity of a commodity supplied by a producer changes as a result of a little change in the price of the commodity. The elasticity of Supply (ES)

=        Percentage change in supply

Percentage change in price

=        %DOs

%Dp

Types of price elasticity of supply

• Elastic supply: Supply is said to be elastic if a small change in price leads to a greater change in the quantity of goods supplied. In this case, elasticity is greater than one or unity, i.e. E = >1<infinity. This type of elasticity is also known as a fairly elastic supply.

• Inelastic supply: Supply is said to be inelastic if a large change in price leads to a smaller or slight change in the quantity of goods supplied. In this case, elasticity is less than one but greater than zero, i.e E = >0<1. This type of elasticity can also be described as a fairly inelastic supply.

• Unity or unitary elastic supply: Supply is said to be unitary when a change in price leads to an equal change in the quantity of goods supplied. In other words, a 5% change in price will lead to a 5% change in supply. In this situation, elasticity is equal to one, i.e. E = 1.

• Perfectly elastic supply or infinitely elastic supply: supply is said to be perfectly elastic when a change in price brings about an infinite effect on the number of goods supplied

In other words, a slight increase in price can make producers increase the supply of the commodity while a slight decrease in price will make producers stop the supply of the commodity. In this case, elasticity is equal to infinity.

• Perfectly inelastic supply or zero elastic supply: Supply is said to be perfectly inelastic if a change in price has no effect whatsoever on the quantity of goods supplied. In this situation, elasticity is equal to zero, i.e. E=0

Measurement of elasticity of supply

The elasticity of supply can be measured or calculated by using the coefficient of price elasticity of supply. The formulae used in calculating the elasticity of supply are:

The elasticity of Supply (ES)

=       % change in supply

=       % change in price

=       %AOS   where:

          ∆                        =          Change

          QS         =          Quantity supplied

          P                        =          Price

          %           =          Percentage

As explained earlier, elasticity is equal to one, and elasticity of supply is unity.

• Elasticity is greater than one, and the elasticity of supply is elastic.
• Elasticity is less than one, and the elasticity of supply is inelastic.

 (ii)       0.5 or ½ is less than one. Hence, the coefficient of price elasticity of supply is inelastic.  

FACTORS AFFECTING THE ELASTICITY OF SUPPLY

• Availability of factors of production: Where factors of production are easily available, supply will be elastic and vice versa

•  The higher the cost of production, the more inelastic the supply and vice versa
•  Possibility of factor substitution: If the input required in producing a good has many substitutes, supply will be elastic. But if there are no substitutes supply will be inelastic.

•  Production Time: Production takes time. The shorter the period it takes to produce a good the more elastic the supply. For products whose production time is long, supply will be inelastic in the short run.

• The number of different goods produced by the producers: Where the producer produces many goods, the supply of any one good will be elastic.

 This is because when the price of good changes, the producer can easily increase the supply by diverting resources to it or decrease the supply by taking resources away from its production. Where the producer produces only one good, the supply will be inelastic.

• The number of different markets in which the producer can sell: If he sells in many markets, the supply in any one market will be elastic since he can increase or decrease the supply in any of the markets.

• Capacity utilization: When producers have spare capacities, supply will be elastic and vice versa.

• The durability of the product: Durable commodities tend to be more elastic than

Non-durable goods.

• The ease of entry of new firms into the industry makes supply elastic. Restrictions of
• new firms make supply inelastic.\

In economics, supply refers to the number of goods and services that producers are willing and able to sell in the market at a given price and time. The supply of a product is influenced by various factors, such as production costs, technology, government policies, and market competition. Based on the nature of the products, there are different types of supply. In this article, we will discuss the different types of supply.

1. Individual Supply

Individual supply refers to the quantity of a product that an individual producer is willing and able to sell in the market at a given price and time. The individual supply curve shows the

1. how to establish enterprises
2. what is a firm
3. price equilibrium
4. scale of preference
5. concept of economics
6. economic tools for nation building
7. budgeting
8. factors affecting the expansion of industries
9. mineral resources and the mining industries

demand and supply

1. RINDER PESTS
   148. NEWCASTLE DISEASE
   149. BACTERIA DISEASES
   150. ANTHRAX
   151. BRUCELLOSIS
   152. TUBERCULOSIS
   153. FUNGAL DISEASES

PROTOZOAN DISEASES
155. TRYPONOSOMIASIS