Determinants of Price Elasticity of Supply

The video tutorial explains the concept of price elasticity of supply, focusing on how different factors affect it. It covers four main determinants: spare capacity, time of production process, factor substitutability, and barriers to entry. Each determinant is discussed with examples to illustrate how they influence the elasticity of supply. The tutorial concludes by emphasizing that a combination of these determinants typically affects the price elasticity of supply for a product.

What is meant by price elasticity of supply?

Explain the difference between elastic and inelastic goods.

What are the four determinants of price elasticity of supply?

How does spare capacity affect the price elasticity of supply?

How does a rise in price affect the quantity supplied for elastic goods?

What happens to the supply of a good when there is little or no spare capacity?

Describe how the time frame of the production process influences price elasticity of supply.

What is factor substitutability and how does it relate to price elasticity of supply?

Explain the concept of barriers to entry and its impact on market supply.

Summarize how a combination of determinants affects the overall price elasticity of supply.