IT AFFECTING ELASTICITY OF SUPPLY

The most important factors that affect the elasticity of supply is the time required to adjust production to changes in public demand, and production costs that enlarged or reduced production. For example, a farmer who brings his garden basil to the market for sale (vegetables, fruits, flowers). Bid will be inelastic. Why? If the market price is higher than expected, he soon will be able to offer more because they have to wait for next season. And if the price is lower than expected, he would sell all its inventory because these items can not be stored longer. Generally supply of agricultural products is inelastic.The time required to adjust the quantity supplied (Qs) with price changes can be distinguished:A. Very short period of timeWithin one or a few days all inputs fixed: therefore, the producers / sellers can not immediately increase the amount offered, although consumers are willing to pay a high price. The amount of goods on offer depending on the number of existing inventory at the time. So, in a very short period of supply is inelastic.B. Short-termDefined period of time sufficient to allow the producers increase production by increasing the number of input variables (by working harder / longer, use more ingredients, etc..), But not long enough to enlarge the capacity of existing production (agriculture, fixed capital such as factory buildings, machines, etc.).In such circumstances, can supply elastic, can also inelastic, depending on the type of goods and production processes. If you enlarge the rising cost of production caused by fast, make-S will be inelastically. But if production costs rise with almost no added production, S will be elastic. Generally, agricultural supply is inelastically, while the factory is more elastic.C. Long-termDefined period of time long enough to enable manufacturers to increase production capacity by increasing fixed capital (a new plant, machinery, agricultural extension, etc.) to adjust production with demand. The longer period of time, more elastic supply.In the long term, the development of production techniques in industry and large-scale production can actually cause prices to fall, so that goods ¬ goods once considered luxuries and expensive to be cost goods bought by the masses (for example, transistor radios, calculators , etc.).