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 ?
But in that computation, market share was 78 %, demand elasticity was set at the weighted average of the lowest values from the studies surveyed, and supply elasticity was set at 1.
It is therefore more difficult to estimate the welfare effects of shale gas if the supply elasticity and drilling elasticity do not line up.
Long-run supply elasticity depends in large part on the price-responsiveness of the development of new extraction technologies.
This is surprising, given that recent theoretical and empirical evidence suggests low housing supply elasticity may play an important role in the emergence of market bubbles and decreased housing affordability (Berry and Dalton, 2004; Glaeser, 2006; Glaser, Gyourko, and Saiz, 2008).
Then, we show that health-care supply elasticity may be low or even negative.
(3) This measure of market power for the dominant firm depends upon the dominant firm's market share, s, the market price elasticity of demand, [[epsilon].sub.D], and the competitive fringe supply elasticity, [[epsilon].sub.S].
Conditional on a labor supply elasticity close to 3, TFP shocks are the major contributor to fluctuations in the period 1954-1981 in the United States.
co-integration analysis, to estimate supply elasticity for citrus export from Pakistan.
(1) If the intertemporal substitution hypothesis were to explain fluctuations in hours, it would require a labor supply elasticity beyond the admissible estimates from the empirical micro studies, which are typically less than 0.5.
The authors find that the aggregate labor supply elasticity of such an economy is around one, bigger than micro estimates but smaller than those often assumed in aggregate models.
Intuitively, because an individual's labor supply is all or nothing at all, the aggregate labor supply elasticity can be much larger than the elasticity at the individual level.(12) Figure 8 illustrates these labor market effects of a shock to technology with a larger aggregate labor supply elasticity.
She finds that the tariff will lower vulnerability if and only if the supply elasticity is greater than a critical value.