elasticity

-Measures how the quantity of supply reacts to a change in price 

-Firms aim for high elasticity of supply -so they can react rapidly to changes in price and demand

To increase elasticity:

• Improve their technology
• introduce flexible working hours 
• have an excess production capacity

Price Elasticity of Supply:

PES- %change in quantity supplied/%change at price 

-the elasticity of supply greater than 1 =percentage change in quantity supplied will be greater than one %price change

-higher PES =more elastic supply (PES >1)

-smaller PES  =more inelastic supply (1>PES >0)

Perishable goods :

• products which are more likely to perish due to weather conditions like crops will have a more inelastic supply 

Recessionary period:

• during a period of high unemployment -we see a more elastic supply 
• because if firms try to expand their production -they could have a larger amount of labour to hire 
• their ability to attract labour is high

Agility :

• agile firms keep high levels of stock
• this makes supply more price elastic since they can react quickly to increases in demand by releasing stock
• Firms with agile factor mobility= more price elastic in supply

short-run :

• capacity fixed 
• one /more factors of production are fixed (more likely capital)
• hard to increase production in this period 
• supply is inelastic

long-run :

• no factors of production are fixed -variable 
• firms are able to increase capacity 
• supply is more elastic in the long run as they have more time to react to price and demand shifts