Grade Booster student workshops are back in cinemas for 2022. Learn more

Economics

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

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

Boston House,
214 High Street,
Boston Spa,
West Yorkshire,
LS23 6AD

Tel: +44 0844 800 0085

© 2022 Tutor2u Limited. Company Reg no: 04489574. VAT reg no 816865400.