Saturday, July 21, 2018

Supply Sensitivity to non-price factors


  1. Flexibility of Inputs: If the inputs are irreplaceable, in their absence the elasticity of supply is relatively less than a company that has the inputs readily available. Example: a)"Hotel chef " is an input which can't be substituted unlike the server in a restaurant. b) Pilot vs Cabin crew.
  2. Mobility of Inputs: If inputs are transferable from one use to another, it will affect the elasticity of supply. Higher the mobility, greater the elasticity of supply of goods & lower the mobility, lesser the elasticity of supply of goods. 
  3. Durability: Goods which can be stored or not perishable have relatively elastic supply than goods which are perishable.
  4. Time: If price of goods increase & producer have sufficient time to increase their output then supply is more elastic, if time period is short & no time to increase output then supply is inelastic.
  5. Ability to produce substitute inputs: If a fixed quantity of inputs can be overcome, then the elasticity of supply is higher & vice versa.



      



                       

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