How does the quantity supplied of a good with a large elasticity of supply react to a price change

Question

Antonio Harmon

Business

2 May, 10:59

How does the quantity supplied of a good with a large elasticity of supply react to a price change

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Answers (2)

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Haley Noble · Answer 1

If quantity supplied of a good has a large elasticity of supply (greater than one) then the reaction is elastic.

Explanation:

Elasticity of supply refers to the response that is generated by the manufacturers or producers about the price of the product based on the quantity that is demanded. When the prices of any goods or services increases the supply also increases.

It is the relationship between the quantity of the goods and devices that is supplied to the price changes of that goods or services. Elasticity of the supply refers ratio of the change in the quantity of goods and services that is being supplied to the percentage change in price of that product or services. If quantity supplied of a good has a large elasticity of supply (greater than one) then the reaction is elastic.

Porter Small · Answer 2

The quantity supplied of a good with a large elasticity of supply react to a price change as "it will be very sensitive to price change".

Explanation:

Producer tolerance to shifts in the quality of its goods or services. Generally speaking, if prices rise the supply does so. Supply elasticity is calculated as the ratio of proportionate variability in the quantity delivered to the proportionate price change.

The amount given of a good with a high supply elasticity dramatically responds to a change in price. A small price increase induces a large supply increase and a small price decline triggers a significant supply drop. Supply elasticity is an indicator of an industry or a producer's sensitivity to price fluctuations for its product. Also considerations are the availability of critical resources, technological innovation and the number of rivals that create a product or service.