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Lecture 30

ECON 1010 Lecture 30: Lecture 30

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ECON 1010
Laura K.Brown

Oc78 1. The law of supply states that higher prices raise the quantity supplied 2. Price elasticity of supply: a measure of how much the quantity supplied of a good responds to a change in the price of that good, computed as the percentage change in quantity supplied divided by the percentage change in price 3. Elastic if the quantity supplied responds substantially to changes in the price 4. Inelastic if the quantity supplied responds only slightly to changes in the price 5. The price elasticity of supply depends on the flexibility of sellers to change the amount of the good they produce 6. Manufactured goods have elastic supplies because the firms that produce them can run their factories longer in response to a higher price 7. A key determinant of the price elasticity of supply is the time period being considered 8. Supply is usually more elastic in the long run than in the short run Computing the Price Elasticity of Supply: 1. Price elasticity of supply = % change in quantity supplied / % change in price The Variety of Supply Curves: 2. Because the price elasticity of supply measures
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