Microeconomics Summary Part 2: Supply and Elasticity

Supply- Quantity of Goods and services that will be supplied to the market at various prices at different periods of time.

Supply is determined by

- Price

-COP

-Prices of other products

-Taxes and Subsidies

-Technological Progress

-Weather

A change in the price will result in a movement along the price curve

A change in any other factor  will cause the supply curve to shift

Maximum Price-
Set by the government when they feel that the price of a good is too high

Elasticity-
Price  Elasticity of demand

Def- Measure of the responsiveness of the demand for a product to the change of price

0- Perfectly Inelastic

Under 1- inelastic

1- Unitary

Over 1- Elastic

Infinity- Perfectly elastic

Cross Elasticity of Demand

Measure of the responsiveness of demand for one product to the change in the price of another product

Value

0- perfectly inelastic

Undr 1- inelastic

1- Unitary

Over 1 Elastic

Infinity- Perfectly Elastic

Income Elasticity of Demand