[2] Robert B Ekelund, S Ford, and John D Jackson “Are Local TV Markets Separate Markets?” International Journal of the Economics of Business 7:1 (2000): 79–97 5.3 Price Elasticity of Supply LEARNING OBJECTIVES Explain the concept of elasticity of supply and its calculation Explain what it means for supply to be price inelastic, unit price elastic, price elastic, perfectly price inelastic, and perfectly price elastic Explain why time is an important determinant of price elasticity of supply Apply the concept of price elasticity of supply to the labor supply curve The elasticity measures encountered so far in this chapter all relate to the demand side of the market It is also useful to know how responsive quantity supplied is to a change in price Suppose the demand for apartments rises There will be a shortage of apartments at the old level of apartment rents and pressure on rents to rise All other things unchanged, the more responsive the quantity of apartments supplied is to changes in monthly rents, the lower the increase in rent required to eliminate the shortage and to bring the market back to equilibrium Conversely, if quantity supplied is less responsive to price changes, price will have to rise more to eliminate a shortage caused by an increase in demand Attributed to Libby Rittenberg and Timothy Tregarthen Saylor URL: http://www.saylor.org/books/ Saylor.org 267