In

supply we noted that producer of goods offer to sell more of it when the price of the goods rises, when their input prices falls or when their technology improves. To turn from qualitative to quantitative statement about quality supplied

 The

law of supply states that higher prices raises the quantity supplied. The price elasticity of supply measures how much the quantity supplied respond to changes in the prices. Supply of a goods is said to be elastic if the quantity supplied responds substantially to changes in the price. Supply is said to be an inelastic if the quantity supplied respond only slightly to changes in the price.

 In

most market, a key determine of the price elasticity of supply is the time period being considered. Supply is useally more elastic in the long run than in the short run. Thus in the short run the quantity supplied is not very responsive to the price. Over long period firms can build new factories or close old ones

 Price

elasticity of supply can be calculated by percentage changed in the quantity supplied devided by by the percentage change in the price . Price elasticity supply = percentage change in quantity supplied percentage change In price

 Suppose

that an increase in the price of milk from 20 to 30 a gallon raises the amount that dairy farmers produces from 9000 to 11000 gallon per month. Percentage change in price =3.15-2.85/3*100 =10% Percentage change in supply =11000-9000/100 =20% Price elasticity of supply =20%/10%=2.0 Elasticity of 2 indicates that the quantity supplied moves twice as much as the price.

1.

Perfectly elasticity of supply :

IN THIS CASE SUPPLY INCREASES OR DECRECES AUTOMATICALLY WITHOUT BEING ANY CHANGE IN PRICE.
Suppl y

1.
2. 3. 4. 5. 6.

Violation of profit maximization Dilution of purpose Costs Too much power Lack of skills Lack of accountability

1.

To the owners
Using funds in the best possible way Ensure fair rate of return Honest and fair reporting of business operations

2.

Responsibility to employees
Recognize the social needs of the workers Fair and reasonable pays Healthy work climate and environment Safety

3.

Responsibility to customers
Quality products and services at reasonable price Avoiding false and deceitful claims about products Avoid comparative advertising Abstain from black marketing, hoarding, etc.

4.

To creditors and suppliers

Accurate information about financial health of the company Ensure reasonable prices for articles supplied and make prompt payments

5.

To community
Develop constructive relationship Participate in community activities like building public parks, granting paid leave, renovation, public drinking water facilities, etc. Offer good housing and efficient transportation to employees

6.

To government
Fait trade policies Pay taxes Obey rules & laws Avoid bribing, lobbying , etc.

7.

To society
Elimination of poverty and provide quality health care Preserve environment Equal employment

 The

Ethics Crisis Ethics means the study of how our decisions affect other people. It also studies peoples rights and duties, the moral rules that people apply in decision making and the nature of relationship among people.

1.
2. 3. 4.

Societal Ethics Stakeholder Ethics Internal Policy Ethics Personal Ethics

 Values
Rights

and Duties Morality

Promise keeping Non malevolence Mutual aid Respect for others Respect for property

Human

Relationships