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April 26, 2024, 02:26:47 am

Author Topic: Elasticity of supply  (Read 877 times)  Share 

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TrueTears

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Elasticity of supply
« on: April 02, 2010, 02:59:05 am »
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One of the factors that influence the elasticity of supply is the time frame for supply decision.

So for example: Momentary supply:

Some goods such as fruit and vegetables have a perfectly inelastic momentary supply because planting decision have been made many years in advance, thus producers can not change their output no matter what the price is.

However in the long-run supply, if all the technologically possible ways of adjusting supply have been exploited, such as planting and growing more fruits and vegetables what would happen to the long run supply? Would it be perfectly inelastic? Perfectly elastic? Elastic? Inelastic? Unit elastic? What would be the reason too?

Also what would happen to the short-run supply, when only some of the technologically possible adjustments to production have been made?

Thanks :)
« Last Edit: April 02, 2010, 04:45:50 pm by TrueTears »
PhD @ MIT (Economics).

Interested in asset pricing, econometrics, and social choice theory.