as micro price elasticity of supply
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Price elasticity of supply
The market for tractors is supplied by two firms, X and Y, each initially having 50 % of the market.A 10 % increase in the price of tractors leads to an increase in output from firm X of 10 % and from firm Y of 20 %. What is the price elasticity of supply of tractors in this market?
Price elasticity of supply
The market for tractors is supplied by two firms, X and Y, each initially having 50 % of the market.A 10 % increase in the price of tractors leads to an increase in output from firm X of 10 % and from firm Y of 20 %. What is the price elasticity of supply of tractors in this market?
Price change = 10%, total output change is 15%Therefore the price elasticity of supply = +1.5
Price elasticity of supply
Elasticity of supply
When demand for a good increases, equilibrium price stays the same. What is the elasticity of supply? Sketch this situation in the supply and demand diagram on the left (below)
Price
Quantity
Price
Quantity
D1 D2
When demand for a good increases, equilibrium price stays the same. What is the elasticity of supply? Sketch this situation in the supply and demand diagram on the left (below)
Price
Quantity
Price
Quantity
D1 D2
S1P1
When there is an increase in demand for a product, the rise in equilibrium price is large but the expansion in quantity produced is small. What is the elasticity of supply? Sketch the situation in the supply and demand diagram on the right (below)
Price
Quantity
Price
Quantity
D1 D2
S1P1
D1 D2
When there is an increase in demand for a product, the rise in equilibrium price is large but the expansion in quantity produced is small. What is the elasticity of supply? Sketch the situation in the supply and demand diagram on the right (below)
Price
Quantity
Price
Quantity
D1 D2
S1P1
D1 D2
S1
When there is an increase in demand for a product, the rise in equilibrium price is large but the expansion in quantity produced is small. What is the elasticity of supply? Sketch the situation in the supply and demand diagram on the right (below)
Price
Quantity
Price
Quantity
D1 D2
S1P1
D1 D2
S1
P1
Q1
When there is an increase in demand for a product, the rise in equilibrium price is large but the expansion in quantity produced is small. What is the elasticity of supply? Sketch the situation in the supply and demand diagram on the right (below)
Price
Quantity
Price
Quantity
D1 D2
S1P1
D1 D2
S1
P1
P2
Q1 Q2
Give three reasons why an industry’s supply curve might be price elastic in the short term