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The price elasticity of supply ( PES or Es) is a measure used in economics to show the responsiveness, or elasticity, of the quantity supplied of a good or service to a change in its price. Price elasticity of supply, in application, is the percentage change of the quantity supplied resulting from a 1% change in price.
Production–possibility frontier. In microeconomics, a production–possibility frontier ( PPF ), production possibility curve ( PPC ), or production possibility boundary ( PPB) is a graphical representation showing all the possible options of output for two goods that can be produced using all factors of production, where the given resources ...
Law of supply. The law of supply is a fundamental principle of economic theory which states that, keeping other factors constant, an increase in sales price results in an increase in quantity supplied. [ 1] In other words, there is a direct relationship between price and quantity: quantities respond in the same direction as price changes.
Fig. 1. An Edgeworth box. In economics, an Edgeworth box, sometimes referred to as an Edgeworth-Bowley box, is a graphical representation of a market with just two commodities, X and Y, and two consumers. The dimensions of the box are the total quantities Ω x and Ω y of the two goods. Let the consumers be Octavio and Abby.
Marginal cost. In economics, the marginal cost is the change in the total cost that arises when the quantity produced is increased, i.e. the cost of producing additional quantity. [ 1] In some contexts, it refers to an increment of one unit of output, and in others it refers to the rate of change of total cost as output is increased by an ...
The economic concept dates back to Adam Smith and the idea of obtaining larger production returns through the use of division of labor. [2] Diseconomies of scale are the opposite. Economies of scale often have limits, such as passing the optimum design point where costs per additional unit begin to increase.
Definition. Elasticity is the measure of the sensitivity of one variable to another. [ 10] A highly elastic variable will respond more dramatically to changes in the variable it is dependent on. The x-elasticity of y measures the fractional response of y to a fraction change in x, which can be written as.
In economics, an isocost line shows all combinations of inputs which cost the same total amount. [1] [2] Although similar to the budget constraint in consumer theory, the use of the isocost line pertains to cost-minimization in production, as opposed to utility-maximization. For the two production inputs labour and capital, with fixed unit ...