Important Determinants Affecting the Supply Elasticity of product - Wood

1. Important Determinants Affecting the Supply
Elasticity of product -Wood
Presented By-
Dipanway Bhabuk
Roll no.15
PGDM IV
Pune Institute of Business Management

2. TYPES OF WOOD
The following offers a brief comparison of American hardwoods, softwoods and
often misused tropical hardwoods and their appropriate applications:
 Hardwoods are deciduous trees that have broad leaves, produce a fruit or nut
and generally go dormant in the winter. Each species can be crafted into
durable, long-lasting furniture, cabinetry, flooring and millwork.
 Softwoods have needles rather than leaves. In a home, softwoods primarily are
used as structural lumber such as 2x4s and 2x6s, with limited decorative
applications.
 Tropical Hardwoods, including mahogany, rosewood and teak. While some
tropical hardwoods can be used for interior applications, including flooring, the
color, grain pattern, hardness and luster of many imported woods differ from
those of American hardwoods.

3. WHAT IS SUPPLY
 Supply refers to the amount of a product that producers and firms are willing
to sell at a given price when all other factors being held constant.
Usually, supply is plotted as a supply curve showing the relationship of price
to the amount of product businesses are willing to sell

4. Elasticity of Supply
 Supply elasticity is defined as the percentage change in quantity supplied
divided by the percentage change in price.
 Elasticity of supply is a measure of the extent in which the supply of the
commodity responds to changes in the quantities of the influencing factors.

5. FACTORS AFFECTING SUPPLY OF WOOD
 Population growth : Population growth broadly acts to increase the supply for
forest products by increasing the number of forest product consumers.
o World population has roughly doubled in the last four decades, and growth in
the consumption of round wood (including wood fuel) has increased at only a
marginally lower rate.
o It is expected that a changing distribution of global population will have a
moderate impact on future forest product supply patterns.

6. FACTORS AFFECTING ELASTICITY OF SUPPLY OF WOOD
 NATURE OF THE INPUTS USED:- The elasticity of supply depends on the nature of
inputs used for the production of commodity. Factors of production are those which are
commonly used and wood is easily available so the supply of the commodity is elastic.
 NATURAL CONSTRAINTS:- The elasticity of supply is also influenced by the natural
constraints in the production of a commodity. If we wish to produce more teak wood, it will
take years of plantation before it becomes usable. Supply of teak wood will therefore be less
elastic.
 RISK TAKING:- The elasticity of supply depends on the willingness of entrepreneurs to take
risk. If entrepreneurs are willing to take risk, the supply will be more elastic. On the other
hand, if entrepreneurs hesitate to take risk, the supply will be inelastic.

7. CONTD….
 NATURE OF THE COMMODITY:-Perishable goods are relatively less
elastic in supply than durable goods. So wood is a durable goods so more
elastic in nature.
 COST OF PRODUCTION:- Elasticity of supply is also influenced by cost of
production. If production is subject to law of increasing costs, then supply of
such goods will be inelastic.

8. CONTD…..
 TIME FACTOR:- Longer the time period, greater will be the elasticity of
supply. Because, over a long period of time, more and more factors are easily
available and their input can be changed to increase (or decrease) output of the
commodity.
 TECHNIQUE OF PRODUCTION:- If the technique is complex and needs
large stock of capital, then the supply of the commodity will be less elastic,
because production cannot be easily increased. On the other hand, goods
involving simple technique of production will have more elastic supply.

9. CONTD…..
 Other impacts of population and income growth : For
example, increasing population density increases the
pressure to convert forestland into other uses and higher
incomes tend to result in higher supply for environmental
services from forests.
o Thus, the changes outlined above are likely to put pressure
on forest resources both in terms of the wood and fiber
products that will be desired from them and the other non
wood goods and services that they will be expected to
produce.

11. Example 1.
The coefficient of elasticity of supply of commodity is 2, what quantity of commodity will a
seller supply at a price of Rs 5 per unit, if he supplies 80 units of it at Rs.4 per unit ?
2 = Q / Q X P / P
2= Q /80 X 4/1
Q / 80 = 2/4
Q / 80 = 1/2
Q = 80 X ½ = 40
New Supply = 80+40 = 120
Answer = The seller will supply 120 units.

12. Example 2.
When the price of a furniture is Rs 4 / unit, a furniture maker supplies 8 per day. If the price
rises to 5 per unit, he is willing to supply 10 per day. Calculate the price elasticity of supply of
furnitures?
Price Elasticityof supply = Q / P X P / Q
Es = 2/1 X 4/8 = 1
The price elasticity of supply is equal to unit.

13. Thank You
Presented By
Dipanway Bhabuk