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PRICE CONTROLS: Government intervention in markets in which legal restrictions are placed on the prices charged. The two basic types of price controls are price ceilings and price floors. Price ceilings are maximum prices set below the equilibrium price. Price floors are minimum prices set above the equilibrium price. Price controls imposed on an otherwise efficient and competitive market create imbalances (shortages or surpluses) which cause inefficiency. However, imposing price controls on a market that fails to achieve efficiency (due to market control, externalities, or imperfect information) can actual improve efficiency. Price controls have also be used economy-wide in an attempt to reduce inflation.
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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.
Recommended Citation:INELASTIC SUPPLY, AmosWEB Encyclonomic WEB*pedia, http://www.AmosWEB.com, AmosWEB LLC, 2000-2025. [Accessed: March 21, 2025].
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Today, you are likely to spend a great deal of time at a going out of business sale looking to buy either a wall poster commemorating the 2000 Olympics or a flower arrangement with a lot of roses for your grandmother. Be on the lookout for broken fingernail clippers.
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In the Middle Ages, pepper was used for bartering, and it was often more valuable and stable in value than gold.
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