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Question
Explain briefly the impact of the cost of production on the elasticity of supply.
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Solution
If the cost of production increases, then there is an adverse impact on supply. If the cost of production increases, then the supply does not change with the change in price and the supply of such a commodity will be perfectly inelastic.
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RELATED QUESTIONS
Which of the following statements are true?
The cost of production will increase if
- The government gives subsidies
- The firm uses obsolete technology
- The price of diesel increases
Identify the correct sequence of alternatives given in Column II by matching them with respective terms in Column I:
| Column I | Column II |
| A. Perfectly Inelastic | (i) Es > 1 |
| B. Perfectly Elastic | (ii) Es < 1 |
| C. Inelastic | (iii) Es = 0 |
| D. Highly Elastic | (iv) Es = infinity |
Choose the correct alternative:
The coefficient of elasticity of a commodity is 0.4. What percentage change in supply will take place if its price rises 20%?
Draw and briefly explain a perfectly inelastic supply curve.
If the price of a commodity increases by 50% and its supply increases by 25% then calculate the price elasticity of supply following the percentage method. Identify the degree of price elasticity.
Draw the supply curve showing price elasticity of supply less than one.
Indicate the degree of elasticity on the supply curve given below:
Identify and define the degree of price elasticity of supply from the diagram for the supply curves S1, S2, S3, S4.
When is supply of a good unitary elastic?
With the help of a suitable diagram, explain the following degree of elasticity of supply.
Es > 1
