What Are The Factors That Affect The Elasticity Of Supply?

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The major factors which can affect the elasticity of supply is the cost of producing additional units of the item. The supply of an item gets more elastic when the manufacturer produces more close substitutes of the product. Secondly, adjustment time makes the supply more elastic because more time is available to adjust the changes brought in price.

Availability of substitutes also affect the elasticity of supply because it increase the options for the customers and make the replacement of capital and labor easier. Spare capacity can also impact the elasticity of supply. In addition to that time period also impact the elasticity because supply can vary over the short and long time periods.

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