elasticity of supply

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Elasticity of supply

The degree of producers' responsiveness to price changes. Elasticity is measured as the percent change in quantity divided by the percent change in price. A large value (greater than 1) of elasticity indicates sensitivity of supply to price, e.g., luxury goods, where a rise in price causes an increase in supply. Goods with a small value of elasticity (less than 1) have a supply that is insensitive to price, e.g., food, where a rise in price has little or no effect on the amount that producers supply.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.

Elasticity of Supply

The relative stability of a security's or product's supply in the face of increased or decreased price. Typically, an increased price results in greater supply because fewer people are buying the product; these products are considered inelastic. For example, Rolex watches are considered inelastic because a higher price results in fewer people purchasing the watches, which, in turn, results in an increased supply. On the other hand, staple products like food and clothing are considered elastic because an increased price does not necessarily lead to more supply. This is because people continue to buy food and (some) clothing. See also: Elasticity of demand.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved

elasticity of supply

the degree of responsiveness of quantity supplied of a particular product (see SUPPLY) to changes in the product's PRICE (PRICE-ELASTICITY OF SUPPLY).
Collins Dictionary of Economics, 4th ed. © C. Pass, B. Lowes, L. Davies 2005
References in periodicals archive ?
The goal of the Ampleforth IEO is to build a digital-asset protocol for smart commodity money, with a unique elastic supply. AMPL supply expands and contracts in response to its price deviating from a 1 USD target.
Heavy reliance on hydrocarbon exports and an elastic supply of expatriate labour limit the impact of the exchange rate on the current account," the IMF said, adding the country's current account position strengthened in 2018 with higher hydrocarbon prices.
Against the backdrop of a highly elastic supply dynamic, rents for Grade B assets are softening further in the short term, where buildings that suffer from poor accessibility and parking arrangements will struggle for occupancy.
Against the backdrop of a highly elastic supply dynamic, rents for Grade B assets are likely to soften further in the short term where buildings that suffer from poor accessibility and parking arrangements will struggle for occupancy, warned the industry expert.
In the Philippine setting, the World Bank noted that private nursing schools are examples of educational institutions with elastic supply of education that can meet external demand for workers.
As a result a key question for owners and investors is how to maintain and grow asset value in light of a highly elastic supply dynamic.
Consistent with the dollar peg, benign global inflationary environment, and elastic supply of foreign labour, inflation is projected to remain below three percent in the medium term.
He noted that diversification "would help reduce the reliance on oil revenues and would increase employment opportunities for nationals in the well-paying jobs in the private sector." He added that "the labor market structure in the GCC, with the majority of nationals employed in the public sector and the private sector reliant on an elastic supply of low-skilled expatriate workers, has enabled the region to develop rapidly so far, and keep inflation relatively low." "However, the costs of this model, low productivity and a low responsiveness of the employment of nationals to economic growth, are becoming an increasing issue and economic diversification becomes more of a policy priority," he stressed.
The trouble is that this is partly a global problem as increasing demand rubs up against insufficiently elastic supply. Last year, we were lucky in Turkey because it was a very mild winter.
Indeed, the preamble to the Federal Reserve Act says its purpose is "to furnish an elastic currency,'" not to furnish an elastic supply of credit.
Patience must reign during inevitable periods of unemployment, and an elastic supply of currency makes the situation worse--not better.
But in fact, because of the differential taxation of diesel (low tax) and gasoline (high tax) in Europe and the fairly fixed ratio of the two when crude is refined (in the absence of catalytic cracking), Europe has excess gasoline that is a source of elastic supply for the U.S.