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.

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.

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).
References in periodicals archive ?
Similar results occur when the price elasticity of supply becomes less elastic.
The fact that the long-run price elasticity of supply of rental housing is estimated to be in excess of 10 means that there will be practically no long-run effect on rents from a reduction of on-base naval housing.
With a set of well-behaved linear demand and supply functions, the optimum ad valorem tax rate of commodity i is lower than that of commodity j if (i) the price elasticity of demand for commodity i (absolute value) exceeds that for commodity j and (ii) the price elasticity of supply for commodity i exceeds that for commodity j.