1.1.4 PES Flashcards
1
Q
Price elasticity of supply
A
The responsiveness of supply to a change in price
2
Q
PES equation
A
PES = %change in quantity supplied/%change in price
3
Q
Price elastic/elastic supply (PES>1)
A
When the change in price results in a proportionately greater change in the quantity supplied
4
Q
Perfectly elastic supply (PES = infinite)
A
When an infinite amount is supplied at a given price
5
Q
Price inelastic/inelastic supply (PED<1)
A
When a change in price results in a proportionately smaller change in the quantity supplied
6
Q
Perfectly inelastic supply (PES = 0)
A
When quantity supplied is fixed and cannot be changed no matter the price
7
Q
Unitary elastic supply (PES = 1)
A
When change in price is equal to change in quantity supplied
8
Q
Factors that affect PES
A
- Factors of production
- Availability of stocks
- Spare capacity
- Time
