Answer to Question #317363 in Microeconomics for SHAN

Question

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

Answer 1

Elasticity of supply measures the responsiveness to the supply of a good or service after a change in its market price.

Factors that determine elasticity of supply includes;

Ease of storage: when goods can be stored easily, the elastic response increases demand.

Ease of switching: supply is more elastic if production of goods can be varied.

Factor mobility: supply curve is more elastic when moving resources into the industry is easier.