Supply Elasticity

   To the right are two different supply curves; SE represents a very elastic supply, while SI represents a very inelastic supply.

   When price increases from P1 to P2 on SI (an inelastic supply curve), the effect on quantity supplied is small, from Q1 to Q2.

    Consider the difference of the effect of a change in price from P1 to P2 on SE (a very elastic supply curve). Here the effect on quantity supplied is many times larger, from Q1 to Q2.

Click Here if you don't see topics listed to the left and below.

Copyright © 1995-2003 OnLineTexts.com, Inc. - All Rights Reserved