Unit elasticity of supply, Managerial Economics

Assignment Help:

Unit Elasticity of Supply

Supply is said to be of unit elasticity if changes in price bring about changes in quantity supplied in the same proportion.  Thus, when price rises, quantity supplied increases in the same proportion, and when price falls, quantity supplied falls in the same proportion.  The supply curve is a straight line through the origin, and the elasticity of supply is equal to one or unity.

When price rises from P1 to P2, quantity supplied increases in the same proportion from q1 to q2.  This is the case of a commodity of which there is a fair amount of stocks or which can be produced within a fairly short period of time.

Conversely, when price falls from P2 to P1, quantity supplied falls in the same proportion from q2 to q1.  This is the case of a commodity which is fairly easily stockable, e.g. dry foods, like dry beans and dry maize.


Related Discussions:- Unit elasticity of supply

Qs = 100+2p, howw much should the firm produce to maximize its profits

howw much should the firm produce to maximize its profits

Product of marginal revenue, Q. Product of marginal revenue? MRPL is th...

Q. Product of marginal revenue? MRPL is the product of marginal revenue and marginal product of labour or MRPL = MR x MPL. • Derivation: MR = ?TR/?Q MPL = ?Q/?L

Average total costs (atc), Average Total Costs (ATC) This is total cos...

Average Total Costs (ATC) This is total cost per unit of output, obtained by dividing total cost by total output i.e. ATC   =   Total Cost              Total Outp

cost pricing and marginal cost pricing method, Discuss the full cost prici...

Discuss the full cost pricing and marginal cost pricing method. Explain how the two  methods differ from each other.

Determine the specific place of demand, Determine the Specific Place of dem...

Determine the Specific Place of demand The demand should relate to a specific market as well. For instance, every year in the town of Dehradun, demand for school bags is 4,000

Eco401, d/f b/w MRTS and MRS

d/f b/w MRTS and MRS

Calculate the output and price in market, Question: Discuss the pricing...

Question: Discuss the pricing practices adopted by firms under different market structures. OR A firm produces a good, which is sold on delivery and in restaurants. The d

What is marginal cost curve, Q. What is Marginal cost curve? MC curve i...

Q. What is Marginal cost curve? MC curve is also 'U' shaped as in Figure below. Marginal cost curve falls initially but then reaches a minimum point and lastly rises. Shape of

Ramsey pricing, explain in detail ramsey pricing with example?

explain in detail ramsey pricing with example?

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd