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Highlight and explain the determinants of elasticity of supply

Highlight and explain the determinants of elasticity of supply

Answers

Faith
1. Availability of factors of productivity
This can be looked at as the ease with which factors of production could be shifted from one use to another.It can also be looked at as the number of available resources. When factors of production are available, supply will highly be elastic and vice versa.
Suppliers will be able to meet demand in good times.

2. Excess capacity of unsold stock (Buffer-stock)
if there exist a lot of stock, in case prices increase, supplier would be able to respond very fast by increasing supply. In such a case supply is said to be highly elastic.

3. Time factor
This refers to the time it takes to produce and supply a product in the market. In the short run, supply of most items that take a long time to produce is inelastic. But, in the long run supply is inelastic.

4. Nature of a commodity
Durable/ stock-able commodities such as clothes etc. have greater elasticity of supply than perishable goods such as milk. This is so because, in case the price of perishable items is low, producers will still be forced to supply the items because they cannot be stored for future sale when the prices would increase.
Faimus answered the question on January 16, 2019 at 19:22

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