Supply & Elasticity of Supply.

It is about meaning & elasticity of supply, Degree and Factor affecting elasticity of suplly.

1. PRESENTATION ELASTICITY OF SUPPLY

2. Definition Of Price Elasticity Of supply The change in the quantity supplied of a product due to a change in its price is known as Price elasticity of supply.

3. Kinds Of Price Elasticity Of supply Perfectly elastic supply Relatively elastic supply Elasticity of supply equal to utility Relatively inelastic supply Perfectly inelastic supply Let Us See Some Views On Them

4. Perfectly elastic supply P R I C E y x Perfectly elastic supply curve S S When the supply for a product changes –increases or decreases even when there is no change in price, it is known as perfect elastic supply.

5. Relatively elastic supply Relatively elastic supply curve P R I C E supply x y When the proportionate change in supply is more than the proportionate changes in price, it is known as relatively elastic supply . S S

6. Elasticity of supply equal to utility Elasticity of supply equal to utility curve y x supply P R I C E When the proportionate change in supply is equal to proportionate changes in price, it is known as unitary elastic supply S

7. Relatively inelastic supply Relatively inelastic supply curve X O Y supply P R I C E When the proportionate change in supply is less than the proportionate changes in price, it is known as relatively inelastic supply S S

8. Perfectly inelastic supply supply S Perfectly inelastic supply curve Y X P R I C E When there is no change in the quantity supplied with the change in its price , it is perfectly inelastic supply S

9. ALL KINDS OF supply CAN BE SHOWN IN ONE DIAGRAM AS FOLLOW S S 1 S 5 Y X supply P R I C E WHERE S 1 ) Perfectly elastic supply S 2)Relatively elastic supply S 3)Elasticity of supply equal to utility S 4)Relatively inelastic supply S 5)Perfectly inelastic supply S5 S2 S3 S4

10. Measurement Of Price Elasticity Of supply There are two methods like Percentage method or proportionate method Geometric method or point method

11. 1 Percentage method or proportionate method ( Es ) = % Change in Quantity Supplied % Change in Price ES = ∆ Q / ∆P*P/Q ∆ Q= change in quantity supplied. ∆P= change in price Q= initial quantity supplied. P= initial price of the good

12. Geometric method or point method Es= Difference b/w Qty and intersect on X axis Difference between Qty and origin

13. EXAMPLE Price of a good falls from Rs.15 to Rs.10 and the supply decreases from 100 units to 50 units. Calculate Es . Q=100 P= 15 Q 1 =50 P 1 =10 Es = P/Q*∆Q/∆P = 15/100*50/5 = 1.5 Es > 1, it is a case of elastic supply

14. (5) Factors Affecting Price Elasticity Of supply

15. Factors Affecting Price Elasticity Of supply Time Factor 1 .Short period - relatively less elastic 2. Long period – more elastic . Nature of the commodity 1. Perishable goods – relatively less elastic 2. Durable goods – elastic supply . Technique of production 1. Complex technique - inelastic 2. Simple technique – elastic

16. .NATURE OF INPUTS USED 1.Commonly used factors – elastic 2.Specialised factors –inelastic . Future price expectation 1.price increase- inelastic 2. price decrease – elastic . Natural constraint less elastic . Risk Taking 1.Willing to take risk- more elastic 2. Unwilling to take risk- less elastic

17. (6) Practical Importance of the Concept of Price Elasticity Of supply

18. Practical Importance of the Concept of Price Elasticity Of supply The concept is helpful in taking Business Decisions Importance of the concept in formatting Tax Policy of the government For determining the rewards of the Factors of Production To determine the Terms of Trades Between the Two Countries

19. Thanking You All