Question

Give any four determinants of elasticity of supply.

Answer 1

1. Behavior of Costs: If production costs rise slowly with increased output, supply tends to be more elastic.
2. Nature of the Commodity: Perishable goods (like milk, vegetables) have inelastic supply, while durable goods (like furniture and machines) have more elastic supply.
3. Market Structure: Supply is usually more elastic under perfect competition than under monopoly.
4. Technical Advancement: Improved technology lowers costs and makes supply more elastic.