1. Supply- An amount of something available for use.
2. Factors affecting supply
a) The higher the price of good, the quantity of supply will be greater.
b) Use of latest technology will increase the supply.
c) Costs of production
d) Climate condition
3. Joint supply- Goods that are supplied together.
4. Competitive supply- Goods that are in direct competition with one another.
5. Price elasticity of supply- Responsiveness of quantity supplied to a change in price.
6. 5 types of Price elasticity of supply
a) Perfectly inelastic supply
b) Inelastic supply
c) Perfectly elastic supply
d) Elastic supply
e) Unitary elastic supply
7. Calculate Price elasticity of supply
Coefficient= % change in quantity / % change in price
8. Perfectly inelastic supply - Coefficient= 0
- Quantity supplied remain unchanged if price of the good changed.
9. Perfectly elastic supply - Coefficient= ∞ / infinity
- Quantity supplied will be infinite if price of the good rises.Quantity supplied will be zero if price is falling.
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10.Unitary elastic supply - Coefficient= 1
- Quantity supplied will increase by 50% if the price of the good increase by 50%.
11. Inelastic supply - Coefficient= C
- Quantity supplied is only 10% if the price rises by 30%.
12.Elastic supply - Coefficient= C
- If price rises by 20%, the quantity supplied will rise by more than 20%.
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