Your SlideShare is downloading. ×
AS Micro Price Elasticity of Supply
Upcoming SlideShare
Loading in...5
×

Thanks for flagging this SlideShare!

Oops! An error has occurred.

×

Introducing the official SlideShare app

Stunning, full-screen experience for iPhone and Android

Text the download link to your phone

Standard text messaging rates apply

AS Micro Price Elasticity of Supply

6,579
views

Published on

Published in: Business, Technology

0 Comments
1 Like
Statistics
Notes
  • Be the first to comment

No Downloads
Views
Total Views
6,579
On Slideshare
0
From Embeds
0
Number of Embeds
18
Actions
Shares
0
Downloads
101
Comments
0
Likes
1
Embeds 0
No embeds

Report content
Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
No notes for slide

Transcript

  • 1. Price elasticity of supply
  • 2. Price elasticity of supplyThe market for tractors is supplied by two firms, X andY, each initially having 50 % of the market.A 10 % increase in the price of tractors leads to an increasein output from firm X of 10 % and from firm Y of 20 %. Whatis the price elasticity of supply of tractors in this market?
  • 3. Price elasticity of supplyThe market for tractors is supplied by two firms, X andY, each initially having 50 % of the market.A 10 % increase in the price of tractors leads to an increasein output from firm X of 10 % and from firm Y of 20 %. Whatis 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
  • 4. Elasticity of supply
  • 5. When demand for a good increases, equilibrium pricestays the same. What is the elasticity of supply?Sketch this situation in the supply and demand diagramon the left (below) Price Price D1 D2 Quantity Quantity
  • 6. When demand for a good increases, equilibrium pricestays the same. What is the elasticity of supply?Sketch this situation in the supply and demand diagramon the left (below) Price Price P1 S1 D1 D2 Quantity Quantity
  • 7. When there is an increase in demand for a product, therise in equilibrium price is large but the expansion inquantity produced is small. What is the elasticity ofsupply? Sketch the situation in the supply and demanddiagram on the right (below) Price Price P1 S1 D1 D2 D1 D2 Quantity Quantity
  • 8. When there is an increase in demand for a product, therise in equilibrium price is large but the expansion inquantity produced is small. What is the elasticity ofsupply? Sketch the situation in the supply and demanddiagram on the right (below) Price Price S1 P1 S1 D1 D2 D1 D2 Quantity Quantity
  • 9. When there is an increase in demand for a product, therise in equilibrium price is large but the expansion inquantity produced is small. What is the elasticity ofsupply? Sketch the situation in the supply and demanddiagram on the right (below) Price Price S1 P1 S1 P1 D1 D2 D1 D2 Quantity Q1 Quantity
  • 10. When there is an increase in demand for a product, therise in equilibrium price is large but the expansion inquantity produced is small. What is the elasticity ofsupply? Sketch the situation in the supply and demanddiagram on the right (below) Price Price S1 P2 P1 S1 P1 D1 D2 D1 D2 Quantity Q1 Q2 Quantity
  • 11. Give three reasons why an industry‚Äôs supplycurve might be price elastic in the short term Short Spare High stock production capacity levels times