ECO 2023 Lecture Notes - Lecture 4: Demand Curve, Utility, Normal Good
Document Summary
A good for which a change in income causes the same directional change in demand is for normal goods and its income elasticity will be positive. ) Price elasticity of supply measures the sensitivity between goods supplied, and their price. In other words; the extent of which a firm would supply more of their good as their price goes up. There is usually a positive relationship between price and quantity supplied (as opposed to quantity demanded), meaning that if the price of the good goes up, hypothetically, firms would supply more of the good in attempt to maximize profit. While domestic (u. s. ) and international demand for nuts, such as almonds, walnuts, and cashews, has increased sizably in recent years, it takes a considerable amount of time to increase their production. So, supply is more elastic in long run than in short run. )
