Elasticity

The shortest period of time economists look at is the market period. In this period, suppliers can only add to the supply they offer to consumers by using up their stocks. A retail firm for example, may take deliveries every week from manufacturers. This weekly arrival of new goods is a flow. Most firms keep a ''buffer'' of goods, in reserve, in case demand rises unexpectedly. Each week, last week's stock is the first to be sold, and part of this week's purchases replaces this old stock. In the market period supply is highly inelastic.

The market period can vary in time. In the fresh vegetable market, an increase in demand for tomatoes on a Tuesday can see retail firms telephoning suppliers and getting extra supplies delivered the next day. If you retail imported cars, the market period could be a month or even more; it takes this long for the cars to be transported from Japan or Germany or where-ever.

The short run is the period of time required to to increase production through employing more labour and raw materials. If the ''pool'' of unemployed skilled labour is small, firms may not be able to increase production by much at all; supply will tend to be inelastic. Similarly, if the raw materials needed in production are also in short supply, then additional production may be difficult to create.