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ADAM SMITH: A Scottish professor (born 1723, died 1790) who is considered the father of modern economics for his revolutionary book, entitled An Inquiry into the Nature and Causes of the Wealth of Nations published in 1776.

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INELASTIC SUPPLY:

The general elasticity relation in which relatively large changes in price cause relatively small changes in quantity supplied. Large changes in price cause relatively small changes in quantity supplied or the percentage change in quantity supplied is smaller than the percentage change in price. This characterization of elasticity is most important for the price elasticity of supply. Inelastic supply is one of two general elasticity relations for supply. The other is elastic supply.
An inelastic supply relation is NOT a very responsive, or stretchable, relation. The inelastic supply relation is most often directed toward supply in terms of the price elasticity of supply. In this context, supply is said to be inelastic if the percentage change in quantity is smaller than the percentage change in price. This means that sellers are not responsive to price changes.

An inelastic supply relation can fall into one of two categories--perfectly inelastic and relatively inelastic.

  • Perfectly Inelastic: Perfectly inelastic means that quantity supplied is unaffected by any change in price. In other words, the quantity is essentially fixed. It does not matter how much price changes, quantity does not budge. Perfectly inelastic supply occurs when producers have no choice of the resources used in the production of a good.

  • Relatively Inelastic: Relatively inelastic means that relatively large changes in price cause relatively small changes in quantity. In other words, quantity is not very responsive to price, but it does change. More specifically, the percentage change in quantity supplied is less than the percentage change in price. Relatively inelastic supply occurs when producers are able to switch resources among a small number of imperfect substitutes-in-production.

<= INELASTIC DEMANDINFERIOR GOOD =>


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INELASTIC SUPPLY, AmosWEB Encyclonomic WEB*pedia, http://www.AmosWEB.com, AmosWEB LLC, 2000-2022. [Accessed: December 4, 2022].


Check Out These Related Terms...

     | inelastic demand | inelastic | elastic | elastic demand | elastic supply | perfectly elastic | perfectly inelastic | relatively elastic | relatively inelastic | unit elastic | elasticity alternatives | elasticity alternatives, demand | elasticity alternatives, supply |


Or For A Little Background...

     | elasticity | coefficient of elasticity | price elasticity of supply | supply | law of supply | supply curve |


And For Further Study...

     | elasticity and demand slope | elasticity and supply intercept | demand elasticity and total expenditure | price elasticity of demand | income elasticity of demand | cross elasticity of demand | elasticity determinants |


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