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Elasticity of Supply Unit 2.

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Presentation on theme: "Elasticity of Supply Unit 2."— Presentation transcript:

1 Elasticity of Supply Unit 2

2 Elasticity of Supply How responsive the change in quantity supplied is when there is change in price

3 Equation: Elasticity of Supply
% Change in Quantity Supplied % Change in Price

4 Elastic Supply Significant change in quantity supplied with change in price When Elasticity is >1 Qs Qs P P

5 Elastic Supply Price Quantity S It’s sleepy

6 Elastic Examples Products that can be made: Quickly Cheaply
With a few, readily available resources

7 Inelastic Supply Minimal change in quantity supplied with change in price When Elasticity is <1 P Qs P Qs

8 Inelastic Supply Price Quantity S It looks like an “I”

9 Inelastic Examples Production of these G&S take a lot of: Time Money
Resources that are not readily available

10 Perfectly Inelastic Supply
NO change in quantity supplied with a change in price Quantity supplied cannot be increased

11 Perfectly Inelastic Supply
Price Quantity S Qty supplied will never change

12 Unitary Elastic % Change in Quantity Supplied = % Change in Price
Elasticity = 1 P Qs = P = Qs

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