Determine the factors which influence price elasticity of supply, illustrate your answer with reference to the market for a commodity or raw materials. Include the following:

a) key terms

b) how these terms relate to the question

c) connect a real-world example

d) diagrams that will illustrate the concept you just defined

e) analyze and explain how the diagram applies to the original question

f) integrate your real-world example into your analysis

g) concluding statement

There are various factors which impact the degree of the price elasticity of supply for a particular product in the market given the economic conditions prevailing in the market.

The most important factor which determines the elasticity of supply is the nature of the product. Those products which require less time and simple technology in order to produce an additional unit will have a price elasticity of supply in comparison to the complicated and sophisticated products.

Another factor which determines the elasticity of supply is the number of producers in the market. The elasticity of supply for a product is inversely proportional to the number of producers present in the market of that product, other factors constant.

Other factors which determine the elasticity of supply is the presence of raw material. Those products who require the raw material which is locally and easily available are believed to have a higher price elasticity of supply in comparison to the other products.