U2 M48 Other Important Elasticities

Price Elasticity of Supply-

• Elasticity of supply shows how sensitive producers are to a change in price.

• Elasticity of supply is based on time limitations & availability of inputs.

• Producers need time to produce more.

INelastic = Insensitive to a change in price (Steep curve)

Most goods have INelastic supply in the short-run

Elastic = Sensitive to a change in price (Flat curve)

Most goods have elastic supply in the long-run

Perfectly Inelastic Supply= Q doesn’t change when price changes (Vertical line)