Study Notes

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

Level:
AS, A-Level, IB
Board:
AQA, Edexcel, OCR, IB, Eduqas, WJEC

Last updated 23 Nov 2018

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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