Long-run Supply Elasticity
As we have just shown, the long-run supply curve is constructed by considering all possible shifts in the demand curve for the product. In order to predict the effects that such increases in demand will have on market price, it is important to know something about the shape of the supply curve. A convenient measure for summarizing the shape of long-run supply curve is the long-run elasticity of supply. This concept records how proportional changes in price affect the quantity supplied, once all long-run adjustments have taken place. More formally: