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## Elasticity: A Measure of Response Part 2

by: Kerrigan Unter

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# Elasticity: A Measure of Response Part 2 ECON 1011

Marketplace > George Washington University > Economcs > ECON 1011 > Elasticity A Measure of Response Part 2
Kerrigan Unter
GWU
GPA 3.0
INTRODUCTION TO MICROECONOMICS
Foster, I

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COURSE
INTRODUCTION TO MICROECONOMICS
PROF.
Foster, I
TYPE
Class Notes
PAGES
1
WORDS
KARMA
25 ?

## Popular in Economcs

This 1 page Class Notes was uploaded by Kerrigan Unter on Monday October 19, 2015. The Class Notes belongs to ECON 1011 at George Washington University taught by Foster, I in Summer 2015. Since its upload, it has received 13 views. For similar materials see INTRODUCTION TO MICROECONOMICS in Economcs at George Washington University.

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Date Created: 10/19/15
ECON 1011 Chapter 8 Elasticity A Measure of Response Part 2 Price Elasticity of Supply Price elasticity of supply ratio of the percentage change in quantity supplied of a good or service to the percentage change in its price all other things unchanged es change in quantity supplied change in price Because price and quantity supplied usually move in the same direction the price elasticity of supply is usually positive The larger the price elasticity of supply the more responsive the rms that supply the good or service are to a price change Supply is price elastic if the price elasticity of supply is greater than 1 unit price elastic if it is equal to 1 and price inelastic if it is less than 1 A vertical supply curve is perfectly inelastic its price elasticity of supply is zero A horizontal supply curve is perfectly elastic its price elasticity of supply is in nite 31 Time An Important Determinant of the Elasticity of Supply Time plays a very important role in the determination of the price elasticity of supply 32 Elasticity of Labor Supply A Special Application labor supply curves have their normal upward slope higher wages induce people to work more Consumer Surplus Consumer surplus the difference between what consumers are willing to pay for a unit of the good and the amount consumers actually do pay for the product Consumer surplus is used to measure the welfare of a group of consumers who purchase a particular product at a particular price Producer Surplus Producer the difference between what producers actually receive when selling a product and the amount they would be willing to accept for a unit of the good Producer surplus is used to measure the welfare of a group of rms that sell a particular product at a particular price Producer surplus can be interpreted as the amount of revenue allocated to xed costs and pro t in the industry

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