Table4-5 Summary of Price Elasticity of Supply
The size of the changes in the equilibrium price and quantity following
a shift in demand depends on the time frame of the analysis. The initial
equilibrium is at with price and quantity Demand then
increases from to
Immediately following the demand shift, the relevant supply curve is the
short-run curve so that the new equilibrium immediately following
the demand shock is at Price rises sharply to and quantity rises
only to In the long run, the supply curve is the more elastic one given
by The long-run equilibrium is at price is (less than ) and
quantity is (greater than ).
As with demand, the terminology for supply elasticity becomes clearer
with time and practice. See the Study Exercises at the end of this chapter
to work through several examples. Table 4-5 summarizes the
terminology for price elasticity of supply.
E 0 , p 0 Q 0.
D 0 D 1.
SS,
ES. pS,
QS.
SL. EL; pL pS
QL QS(ηS)