inelastic supply

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When the elasticity of supply is less than 1. The supply of a good or service is inelastic if a given percentage increase in the price at which it can be sold produces a smaller percentage increase in the quantity supplied. Supply is inelastic if a rise in price causes little increase in output by existing firms and little entry to an industry of new firms. If it is easy to expand production in existing firms, or to attract entry of new firms, supply is elastic.

Subjects: Economics.

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