Booklet 3 - supply and elasticity of supply ( key words )

competitive supply

a situation in which a firm can use its factors of production to produce alternative products

contraction in supply

a movement down the supply curve

elasticity

a measure of how sensitive of one variable to a change in another variable

extension in suppply

a movement up the supply curve

joint supply

when a firm produces more then one product together

law of supply

as price rises, quantity supplied rises due to the incentive for producers to gain a profit

long run

is a time period in which all factors of production can be varied

PES

a measure of the sensitivity of quantity supplied ofa good and service to a change in price of that good or service

PES formula

% change in quantity supplied / % change in price

subsidy

a grant given by the government to producers to encourage production of a good or service

supply curve

a graph of quantity supplied at any given price

supply

the quantity of a good or service a firm chooses to sell at any given price in any given time period