Answer to Question #312026 in Microeconomics for Puchu

Question

Elaborate the term elasticity of supply and explain any three factors that determines elasticity of supply

Answer 1

The elasticity of supply measures the responsiveness to the supply of goods or services after a given change in the market price.

Factors affecting elasticity of supply.

Technology innovation. A more efficient production lowers costs and allows larger production of output at a minimum price.

Availability of resources. Required inputs should be readily available to step up production when demand increases.

Flexibility. Efficient producers can respond more quickly to increased demand.