Economics

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Elasticity of Supply: Inside The World's Biggest Baked Bean Factory

Level:: AS, A Level, IB

Board:: AQA, Edexcel, OCR, IB, Eduqas, WJEC

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Here is a terrific short video that takes us into a baked bean factory capable of producing over two million cans a day through a two hour production process. The beans are cooked in the tin! This is a stunning example of capital-intensive production leading to constant cost supply i.e. a perfectly elastic supply during routine manufacturing.

Elasticity of Supply: Inside The World's Biggest Baked Bean Factory

Key summary notes on price elasticity of supply

If supply is elastic, then producers can increase their output without a rise in cost or a time delay
If supply is inelastic, then firms find it hard to change their production in a given time period

The formula for price elasticity of supply is:

% change in quantity supplied divided by the % change in price

When Pes > +1, then supply is price elastic
When Pes < +1, then supply is price inelastic
When Pes = 0, supply is perfectly inelastic
When Pes = infinity, supply is perfectly elastic following a change in demand

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