This week’s mnemonic is for factors affecting price elasticity of supply
BRITS
Barriers to entry – e.g. Patents or high cost of advertising could make it hard for new firms to enter the market
Raw materials – If raw materials are readily available, it will be relatively easy to expand production
Inventory – Businesses with plenty of stock can increase supply easily.
Time – Many agricultural products take time to make so supply is fixed in the short term.
Spare Capacity – If businesses are not running to full capacity they are more able to increase supply. The supply of goods and services is often most elastic in a recession when there is plenty of spare labour and capital resources.
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