How the elasticity of supply will change overtime and why?

Answer 1

If we define the elasticity of supply as the change of supply quantity vs a price change, (price elasticity), one of the most obvious reason is when the profitability of that supply changes.

In fact, supply is not affected by price but by the profitability of producing that good.

It is supposed by economists that, in the mid term, a higher price will increase the profitability, and so producers would be motivated to produce even more. But it is the profitability what motivates supply.

So, if the cost of producing that good raises strongly (because lack of raw material, new taxes, etc.), it could be that the profitability is affected. So the elasticity changes.

The opposite could be the same: a cost reduction could improve profitability and motivate to offer more at the same price.

Hope it is useful.

Answer 2

I'm not certain what you are asking in relation to the elasticity of supply. Basically, to my knowlege, there are elastic goods and inelastic goods. Elastic goods are things like a yaught, that isn't necessary, it is just something someone who has the money is willing to buy. If a tax was levied against that product, some people may not be willing to pay the increased amount and decide not to buy the good at all. An inelastic good would be something like food, alcohol, cigarettes or medicine. For example, no matter how much they tax cigarettes and alcohol, people keep buying them.

Supply does not typically have elastic properties, it is more defined by price. So if more people will pay more money for a product, more of that product will be supplied. If the product is scarce then the price will continue to go up until it either runs out or is priced out of the market.

Answer 3

production doesn't change over night. First you will want to make sure you are reacting to a long term trend and not temporary trends.

Given more time supply is more elastic. Time to plan and implement your plan. This is true of 1) expansions, 2) new start ups 3) changing products 4) going out of business 5) downsizing

Answer 4

Over time, supply would become more elastic, beacuse in the long run, all factors of production are variable, while in the short run, some may be fixed.

Answer 5

Supply will always tend to expand in the overall as more supplies of, and alternatives to a commodity will come into a marketplace. This does not mean, however, that every commodity will do so.

Answer 6

i can see everthing coming to a hault wit de boom as it is ( from ireland) There is such a huge demand for services