In another hand when the cost of the building houses increase, i.e. This fact can be achieve by the non-price determinant factor, i.e. We’ll occasionally send you promo and account related emails. Perfectly Elastic Supply: The supply curve is horizontal due to the quantity supplied does not affect with the price fluctuations. These considerations become very important at times of full employment when the only available factors of production are those which can be attracted from other industries and uses. tax benefits or building social housing. Areas that are not developed can built up, in addition developed areas can also change its land use, however these are time consuming. The demand curve is downward sloping from left to right and when demand curve shift to the right or left it will represents an increase or decrease of demand. Furthermore, as the demand is high consequently there also will be a supply. Welcome to EconomicsDiscussion.net! Manufacturing industries, on the other hand, can usually adjust their output upwards or downwards fairly quickly in response to changing conditions in the market. The elastic supply curve will be upward sloping originating from the Y axis. Under this situation, the numerical value of Es will be greater than one but less than infinity. Here quantity supplied changes by a larger magnitude than does price. The economic inter­pretation of this supply curve is that an unlimited quantity will be offered for sale at the price OS. To quantify such change we require the concept of elasticity of supply that measures the extent of quantities supplied in response to a change in price. Government Polices i.e. For example, land is perfectly inelastic supply due to houses price increase and the land supply remains the same. Fig. The firm can supply an unlimited amount of product at that price. The demand curve in inelastic demand is steep, and it is dictated by the quantity of demand does not change to the same amount as the price do. The most important issue to determine the supply whether is elastic or inelastic, time tends to be the main matter, in long term supply the quantity of houses will increase and it will therefore becoming more elastic. 4.18). This means that elasticity in demand is perfect, the reason for that is when there is any change in price and the demand slightly decline or nothing, then the price elasticity of the product is infinity. The property types can differentiate as house, flats, apartment, bungalows and etc. The curve which is shown in figure 1000 indicates for a given change in price there is a greater change in supply. The demand curve is downward sloping from left to right and when demand curve shift to the right or left it will represents an increase or decrease of demand. As price increases from OP to OP1 quantity supplied is unresponsive if the supply curve is Q1S1. The narrowly a commodity is defined the greater is its elasticity of supply. For example when government have announced to build more social housing, the houses will not be constructed immediately, because it takes time for the legal complexities, obtaining planning permission and also the construction period. Any straight line supply curve that intersects the vertical axis above the origin has an elasticity of supply greater than one (Fig. Supply is more elastic in the long run than in the short run. The assignment generally includes examples and graphical analyses to demonstrate the issues that will affect the owner occupied residential market. Share Your Word File When the quantity of supply is less than the increase in price, then the price elasticity is described as inelastic. In this assignment I am going to explain the economic concept of Owner occupied Residential. The elasticity of supply for such goods is equal to zero. (d) Perfectly Elastic Supply (E S = ∞): The numerical value of elasticity of supply, in exceptional cases, may reach up to infinity. Owner occupied sector means that the householder who ultimately live and own at the same property. It is also defined as the percentage change in quantity supplied divided by percentage change in price. tax benefits or building social housing. TOS4. Graph 1.8 Perfectly Elastic Supply Curve Diagram. This indicates quantity of demand will remain the same and does not depend on any change in price. Our mission is to provide an online platform to help students to discuss anything and everything about Economics. Definition of Perfectly Inelastic Supply: A product has a perfectly inelastic supply when the quantity supplied is the same regardless of price. Here the numerical value of elasticity of supply is greater than zero but less than one. Quantity supplied increases to OQ2 (> OQ1) when the supply curve is SS2 and quantity supplied rises to OQ3 (> OQ2 > OQ1) if the supply curve is SS3. Elasticity of supply in such case will be infinite. For example when government have announced to build more social housing, the houses will not be constructed immediately, because it takes time for the legal complexities, obtaining planning permission and also the construction period. Perfectly elastic demand shows a horizontal line. Graph 1.8 Perfectly Elastic Supply Curve Diagram Perfectly Inelastic Supply: tax benefits or building social housing. Moreover, these assignments are performed by professional writers and researchers and can serve as exemplars of quality academic writing. Supply is said to be inelastic when a given percentage change in price causes a smaller change in quantity supplied. All rights reserved. 4.17). What Does Perfectly Inelastic Mean? If these resources can be obtained cheaply then supply is likely to be relatively elastic. Here we are concerned with certain factors which affect elasticity of supply viz., the nature of the good, the definition of the good, the relevance of the time period, and so on. Triangles ABC and NQA are similar triangles. SS1 curve drawn in Fig. This can be verified in this way. Owner occupied sector means that the householder who ultimately live and own at the same property. If supply is to be increased it is necessary to attract resources from other industries. This indicates quantity of demand will remain the same and does not depend on any change in price. This is usually true in the case of most agricultural commodities, because of the natural time lag between planting and harvesting of crops. In another hand, to decrease the demand will depends on the non-price determinant, i.e. Privacy Policy3. Thus, when the price of a commodity is relatively high, the producers are likely to be supplying near the limits of their capacity and would, therefore, be unable to make much response to a still higher price. One important point to note here. I don’t have any good examples. If a very short period or momentary period is considered, the supply curve will be perfectly inelastic (Q1S1curve), where quantity supplied does not change even if price changes. 4.23 shows how time influences the supply of a commodity. The reason is easy to find out. Properties which are elastic are normally luxury and it has a very competitive market and many alternatives. When the quantity of supply is greater than increase in price, then the price elasticity is described as elastic. Share Your PPT File, Public Sector Enterprises or Undertakings in India. Copyright © 2020 CustomWritings. The supply curve is horizontal due to the quantity supplied does not affect with the price fluctuations. #4 Relatively Less Elastic Supply: This type of elasticity of supply is for those goods whose supply changes relatively less when compared to the change in its price. In the short term the construction are price inelastic and this will classified as supply inelastic. The housing market of any country or places is determined by a range of demand and supply factors. As a general rule, the more easily the factors can be transferred from the production of one good to that of another, the greater will be the elasticity of supply. Graph 1.8 Perfectly Elastic Supply Curve Diagram. P/Q), the two ratios cancel out each other. ; What is the formula for calculating price elasticity of supply? SS3 curve is a rather long run supply curve when quantity can be adjusted greatly to price change. So supply becomes relatively inelastic. It can be calculated by using the following formula: ES = % change in quantity supplied/% change in price. There is always a demand for housing; the main reason for that is mainly due to population growth, the life expectancy rates improved, and also the incline of one person household. Time also exerts considerable influence on the elasticity of supply. when the availability of labour are less, it will raise the labour cost. When the quantity of supply is greater than increase in price, then the price elasticity is described as elastic. Perfectly Elastic Supply: The supply curve is horizontal due to the quantity supplied does not affect with the price fluctuations. Furthermore, as the demand is high consequently there also will be a supply. For example, it is easier for a tailor to transfer resources from producing red skirts to green skirts than from skirts to men’s trousers. When the price is relatively low, however, producers may well have surplus capacity which a higher price would induce them to use. This usually involves raising the prices of these resources. If the NT straight line passes through the origin, the elasticity of supply becomes unity and if it passes through the price or vertical axis, the coefficient will be greater than one, i.e., elastic. For example, when advance building technology takes place, it is a way that can reduce the cost on building houses, and increasing the revenue for suppliers, the supply curve S1 will ultimately shift to the right S2, as shown in graph 1.0, this represents an increase in the quantity supply at each and every price such as using the prefabrication technique, it will reduce the construction period and labour cost comparing with the in-situ technique.

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