Supply and elasticity of supply

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

06 October 2013 what happens to supply when the price of cheese goes up from $50 per kg. to $55 per kg.?
answer:supply extends

but,as per the statement
"if producers expect that prices are going to increase in future they decrease the supply now"
is this statement considering regarding prices of factors of productoion or anything else?
please explain!

CA Vijeta Verma

CA Vijeta Verma (Expert)
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06 October 2013 This is some sort strategy of suppliers,as if supply is limited in a particular period and demand for that product remains consistent in general,then consumers would not mine paying higher prices(uptill certain limit).Many a times consumers are brand oriented and they would mine paying increased prices as the product market is very well established.

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