(a) Define elasticity of supply
(b) When is supply described as (i) elastic (ii) inelastic
(c) Outline any two factors that influence elasticity of supply.
Explanation
(a) Elasticity of supply is the degree of responsiveness of the quantity supplied to price change.
OR Elasticity of supply = \(\frac{% change in quantity supplied}{% change in price}\)
(b) (i) Supply is described as elastic when the co-efficient of elasticity is greater than one. Or when the % change in quantity supplied is greater than % change in price.
(ii) Supply is described as inelastic when the co-efficient of elasticity is less than one. When the % change in quantity supplied is less than % change in price.
(c) (i)How quickly the factors of production can be switched from one type of production to another,
(ii) The time required to produce a commodity.
(iii) The availability of factors of production.
(iv) Perishable and bulky goods tend to be relatively inelastic in supply.
(v) The behaviour of cost of production as output changes.
(vi) Ease of entry or exit of producers.
(viii) Change in Technology
(ix) Nature of the product - industrial oragricultural product