Which one of these supply curves is elastic? Curve A Curve B Elasticity of Supply Which one of these supply curves is elastic? Curve A Curve B Price Price Quantity Supplied Quantity Supplied

The degree to which a change in price affects the quantity supplied. Elasticity of Supply The degree to which a change in price affects the quantity supplied. Price Price Quantity Supplied Quantity Supplied

Elastic vs. Inelastic An elastic supply curve means that producers will make a lot more of a product if the price increases An inelastic supply curve means that producers cannot make a lot more of a product even if price increases

Determinants of Elasticity of Supply Is the product difficult to produce? If it is easy to produce, supply is elastic If it is hard to produce, supply is inelastic

Example: Expensive or Inexpensive to Produce Is the product expensive to produce, or inexpensive to produce? Which of these products is easier to produce? Inelastic Elastic

Does the product need skilled workers to produce it? If a product needs skilled workers to produce it, supply is inelastic If a product does NOT need skilled workers to produce it, supply is elastic

Skilled vs. Unskilled Labor Which laborer is skilled, and which is unskilled? Why? Which employee is easier to replace? Is it easier to produce hamburgers, or medical care? Elastic Inelastic

Is the product expensive to produce? If product is expensive to produce it is inelastic If the product is inexpensive to produce it is elastic

In summary Elasticity of supply tells us how fast supply responds to quantity demand and price increase. When there is a popular product that is in short supply for instance, the price may rise as a result. The manufacturers of that product will increase output (the supply) to keep up with the demand. The higher the elasticity of supply, the faster the supply will increase when demand and price increase. Some goods/services are more supply inelastic however, whenever there is a supply shortage. Limited tickets to a concert may have a very inelastic supply. The price of the concert tickets can be raised to any amount, but because there is a fixed number of seats and tickets, the supply (of tickets sold) may not be increased by much if at all.