5. Define elasticity of supply. On the basis of the value of coefficient of elasticity of supply, how many types of situations can you imagine? Represent those situations diagrammatically.
Also, What is the meaning of the 'value of coefficient of elasticity of supply'?
Dear Student,
Elasticity of supply: Elasticity of supply is the measure that is used to calculate and show change in quantity supplied due to change in price of the commodity.
Value of coefficient of elasticity of supply: Coefficient of elasticity of supply is the value that is obtained by calculating the percentage change in quantity supplied due to percentage change in its price.
On the basis of value of coefficient of elasticity of supply we can get four situations:
(i) when ES is less than 1: In this situation , supply of the good can be described as inelastic. It means quantity supplied is less responsive to the change in price of commodity.
(ii) when ES is more than 1: In this situation, supply of the good can be described as elastic.It means quantity supplied is more responsive to the change in price of commodity.
(iii) When ES is equal to 0: It indicates that quantity supplied is not responsive to change in price of commodity.Its supply is fixed.
(iv) When Es is equal to 1: In this supply of good is unit elastic. and there is equal response of change in quantity supplied due to change in its price.
(v) When ES is equal to infinity: In this situation, supply of good is perfectly elastic. In these situations, supply is infinite at any one price.
Hope this information will clear your doubts on this topic.
If you have any more doubts just ask on the forum and our experts will try to help you out as soon as possible.
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Elasticity of supply: Elasticity of supply is the measure that is used to calculate and show change in quantity supplied due to change in price of the commodity.
Value of coefficient of elasticity of supply: Coefficient of elasticity of supply is the value that is obtained by calculating the percentage change in quantity supplied due to percentage change in its price.
On the basis of value of coefficient of elasticity of supply we can get four situations:
(i) when ES is less than 1: In this situation , supply of the good can be described as inelastic. It means quantity supplied is less responsive to the change in price of commodity.
(ii) when ES is more than 1: In this situation, supply of the good can be described as elastic.It means quantity supplied is more responsive to the change in price of commodity.
(iii) When ES is equal to 0: It indicates that quantity supplied is not responsive to change in price of commodity.Its supply is fixed.
(iv) When Es is equal to 1: In this supply of good is unit elastic. and there is equal response of change in quantity supplied due to change in its price.
(v) When ES is equal to infinity: In this situation, supply of good is perfectly elastic. In these situations, supply is infinite at any one price.
Hope this information will clear your doubts on this topic.
If you have any more doubts just ask on the forum and our experts will try to help you out as soon as possible.
Regards