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Elasticity of Supply Same as demand RE: change in price SE > 1: Very responsive to price change SE < 1: Not Very

responsive to price change SE = 1: Unitary Elastic Change in Quantity Supplied/ Original Supply (% change) / Change in Price/ Original Price (% change) =Elasticity 1) Short run inelastic: Avocado field, hotels can become long term inelastic 2) Elastic: copy stores, coffee shops. Restaurants. Cost of production, I.E. Labor and Output A. Marginal product of labor: Measures change in output @ the margin or place where the last worker has been hired or fired. B. Increasing marginal returns: increased output per additional worker C. Diminished marginal returns: increases output per additional worker @ a decreased rate. Rate starts to fall, based on how much it costs to hire and how much they can output D. Negative marginal returns: overall output decreases per additional worker. Because of the lack of fixed cost or equipment, the workers cannot output as much as they could if the ratio between workers and equipment etc is at an optimal point. Basically, the more workers added, the less they have to do, and output eventually reaches a max, and the cost to PAY these workers goes up as the income hits the roof. Can only output as much supply as you have supplies, more people doesnt always help. See diminishing marginal returns worksheet Part-time workers: Variable Electricity: Variable Copiers/Registers/equipment etc: Fixed Goods: Variable Rent: Fixed Manager: Fixed