Economics – The allocation of resources - Price elasticity of supply (PES) | e-Consult
The allocation of resources - Price elasticity of supply (PES) (1 questions)
Login to see all questions.
Click on a question to view the answer
The price elasticity of supply of labour can vary significantly depending on the type of worker.
Highly Skilled Professionals (e.g., doctors, lawyers): The supply of these workers is generally inelastic.
- Reasons for Inelasticity: These professions often require extensive and expensive training (e.g., years of university study, professional qualifications). The supply of qualified professionals is limited by the time and resources needed for this training.
- Example: Even if a firm offers a higher salary to a doctor, it's unlikely to significantly increase the number of doctors available. The training process is lengthy.
Unskilled Workers (e.g., cleaners, warehouse staff): The supply of these workers is generally elastic.
- Reasons for Elasticity: There are typically fewer barriers to entry for these jobs. More people are willing to take on these roles, especially if wages are relatively low.
- Example: If a factory increases wages for warehouse staff, a larger number of people will be motivated to apply for these positions, leading to a significant increase in the supply of labour.