Answer to Question #153237 in Economics for Aynur

Question

If you order aircraft today, you will get it nice years later. If price of aircraft increases say 20 – 30 percent, quantity of aircraft supplied will increase only after nine years. Supply is quite inelastic. What can you say about the price elasticity of supply in Airbus case?

Answer 1

The aircraft manufacturing market does not have sufficient competition. Consequently, the price elasticity of supply in the case of Airbus shows inelasticity, since this product is a very material-intensive and knowledge-intensive product.