erratim comments on How much does consumption affect production? - Less Wrong

4 Post author: erratim 05 January 2015 03:51PM

You are viewing a comment permalink. View the original post to see all comments and the full post content.

Comments (60)

You are viewing a single comment's thread. Show more comments above.

Comment author: erratim 15 January 2015 07:17:22AM 0 points [-]

I agree with your definitions of the two curves, although I don't know what point you're making by the distinction.

In either case we can ask, "how much will changes in demand affect equilibrium quantity?" In a constant-cost industry, the answer will be 1:1 in the long-run (as indicated by a flat, or infinitely elastic long-run supply curve), but as you gradually shorten the scope over which you're looking at the market, making it a shorter- and shorter-run supply curve, it will steepen (elasticity decrease) such that the answer is "less than 1:1".

Comment author: Furslid 16 January 2015 03:15:55AM *  0 points [-]

First, is that because they are different things it's not a contradiction to what I said.

The second is that elasticity is not validly applied to long term supply curves, as they are not a function of supply in terms of price.