Question 23 of 39
Q.What are the factors governing elasticity of supply ?
Tamil Nadu DgeTamil Nadu HSC First Year (DGE) Commerce Board 2023Subjective· 3mImportance★★★★★
59% · 23/39 Questions
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Start your 14-day free trial to unlock the full solution →Elasticity of supply depends chiefly on the time period, the nature of the commodity, the cost and ease of production, availability of inputs, and storage facilities/price expectations.
In the Tamil Nadu HSC Class-11 Economics syllabus, the price elasticity of supply shows the degree to which producers change the quantity supplied when price changes. The factors governing it are:
- Time period. This is the most important factor. In the market period supply is almost fixed (inelastic); in the short run supply is fairly elastic; in the long run firms can fully adjust capacity, so supply is most elastic.
- Nature of the commodity. Supply of durable goods (which can be stored) is more elastic, while supply of perishable goods (vegetables, milk) is relatively inelastic.
- Cost of production. If increasing output raises cost sharply, supply is inelastic; if extra output can be produced at little additional cost, supply is elastic.
- Technique and ease of production. Goods that can be produced quickly and whose output can be expanded easily have elastic supply. …
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