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Factors affecting Supply

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					Factors affecting Supply
Time

   The longer the time period to increase production,
    the more elastic the supply will be.
   Seller of fresh vegetables-
   Supply cannot increase production in a day or even
    a month
   Supply is inelastic and remains so until more
    vegetables can be planted, harvested and brought to
    market.
Ease of Storage

   When the price of a product drops, sellers have two
    options.
   They can either sell the product at the new price or
    put it into storage until the price increases again.
   Steel industry enjoys high supply elasticity because
    it is easy to store steel.
   Agricultural industries have low supply elasticity
    because it’s difficult to store large quantities of
    produce for an extended period.
Cost factors

   Increasing supply may be costly depending upon the
    industry.
   Car manufacturers may be able to increase supply in
    the short term by requiring workers to put in more
    overtime.
   A permanent increase in production may be much
    more costly because a new factory may have to be
    built.
   CYU page 101 Questions 1 and 2

				
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posted:10/9/2012
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