Effect on Producers

Elasticity: It is a measure of the sensitivity of one variable to another.

Supply : Ability and willingness of producers to offer the goods in market for sale at various prices.

Determinants of Elasticity 

Supply 

1) Flexibility of inputs: 

Flexibility means where the inputs in manufacturing process or services can be replaced by other inputs. Consider any best restaurant where the food served is tasty enough, in that place the chef is very important. The chef/cook is not flexible( irreplaceable). But on other side bearer is flexible (replaceable). Now take few more examples: 

Hospital : Doctor(inflexible) and clerk(flexible)

Airplane : Pilot(inflexible) and Airhostess(flexible) 

Movies : Actor(inflexible) and side artists(flexible)

Hence flexibility of inputs influences the elasticity of supply.

2) Mobility of inputs:

Mobility means the inputs that can be relocated from one place to another. 

Examples of immobile inputs: labour, machinery, steel and aluminium plants, land, capital. 

Examples of mobile inputs: circus artists, cheer leaders, theatre artists, actors, maid servants.

3) Durability: 

Durability means the inputs that can be used over long period of time or cannot be used. For machinery’s it is the capability to withstand wear and tear for long time period. 

For example take chemical industry, construction industry, software industry. 

4) Time: 

Time plays a crucial role in the supply. For example consider mobile inputs like drivers they turn out inelastic at particular moment of time which means there is a need of driver at that particular time so then the elastic input also become inelastic. Can also consider some other mobile inputs like maid servants, cleaners, laundry. 

5) Ability to produce substitute inputs: 

It is the capability or ease of creating a substitute.

For example consider production of milk powder to replace milk, creating artificial leather. 

Here price decreases if substitute a cheap input.