price elasticity of supply
TRANSCRIPT
![Page 1: Price Elasticity of Supply](https://reader036.vdocuments.us/reader036/viewer/2022062407/55d4fd05bb61ebaa528b4682/html5/thumbnails/1.jpg)
Unit 1 MicroPrice Elasticity of
Supply
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These are good connective phrases
by contrast…
A consequence of this might be
…
therefore…
this might
mean… on the other hand…this is because
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Diagrams matter!
Diagram must havesFully labeledOriginal and new equilibriumDemand and supply the correct way round Well explained – you must explain why the
curve has shifted, in detailThink about the elasticity – e.g. oil has
inelastic demand and supply
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Price elasticity of supply
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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
![Page 6: Price Elasticity of Supply](https://reader036.vdocuments.us/reader036/viewer/2022062407/55d4fd05bb61ebaa528b4682/html5/thumbnails/6.jpg)
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
![Page 7: Price Elasticity of Supply](https://reader036.vdocuments.us/reader036/viewer/2022062407/55d4fd05bb61ebaa528b4682/html5/thumbnails/7.jpg)
Elasticity of supply
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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
![Page 9: Price Elasticity of Supply](https://reader036.vdocuments.us/reader036/viewer/2022062407/55d4fd05bb61ebaa528b4682/html5/thumbnails/9.jpg)
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
![Page 10: Price Elasticity of Supply](https://reader036.vdocuments.us/reader036/viewer/2022062407/55d4fd05bb61ebaa528b4682/html5/thumbnails/10.jpg)
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
![Page 11: Price Elasticity of Supply](https://reader036.vdocuments.us/reader036/viewer/2022062407/55d4fd05bb61ebaa528b4682/html5/thumbnails/11.jpg)
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
![Page 12: Price Elasticity of Supply](https://reader036.vdocuments.us/reader036/viewer/2022062407/55d4fd05bb61ebaa528b4682/html5/thumbnails/12.jpg)
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
![Page 13: Price Elasticity of Supply](https://reader036.vdocuments.us/reader036/viewer/2022062407/55d4fd05bb61ebaa528b4682/html5/thumbnails/13.jpg)
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
![Page 14: Price Elasticity of Supply](https://reader036.vdocuments.us/reader036/viewer/2022062407/55d4fd05bb61ebaa528b4682/html5/thumbnails/14.jpg)
Give three reasons why an industry’s supply curve might be price elastic in the short term
Spare capacity
High stock levels
Short production
times