GROUP 5

Raylyn Heart Roy Nicole Bravante

Fiona Althea Maningas Franz Jay Francisco
Geraldine Valera Lance Benedict Tordecilla
Edelyn Samillano
DETERMINANTS OF
PRICE ELASTICITY
OF SUPPLY
Agarwal, P. (2020)
said, price 1. Marginal Cost
elasticity of supply
can be influenced • If the cost of producing one more
by the following
factors: unit keeps rising as output rises or
marginal cost rises rapidly with an
increase in output, the rate of
output production will be limited.
The Price Elasticity of Supply will
be inelastic – the percentage of
quantity supplied changes less than
the change in price. If Marginal Cost
rises slowly, supply will be elastic.
2. Time

• Over time price elasticity of supply

tends to become more elastic. The
producers would increase the quantity
supplied by a larger percentage than an
increase in price.
3. Number of Firms

• The larger the number of firms, the

more likely the supply is elastic. The
firms can jump in to fill in the void in
supply.
4. Mobility of Factors of Production

• If factors of production are movable, the

price elasticity of supply tends to be
more elastic. The labor and other inputs
can be brought in from other location to
increase the capacity quickly.
5. Capacity

• If firms have spare capacity, the

price elasticity of supply is elastic.
The firm can increase output
without experiencing an increase in
costs, and quickly with a change in
price.
 -END-
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