1.2.5- Elasticity Of Supply

Question 1

What is PES?

Answer 1

The responsiveness of supply to a change in price of the good

Question 2

What is the equation of PES?

Answer 2

%change in quantity supplied / %change in price

Question 3

What is the PES of a unitary elastic good?

Answer 3

PES=1

Question 4

What is the PES of an elastic good?

Answer 4

> 1

Question 5

What is the PES of an inelastic good?

Answer 5

<1

Question 6

What is the PES of a perfectly elastic good?

Answer 6

infinity

Question 7

What is the PES of an inelastic good?

Answer 7

0

Question 8

What are the factors affecting PES?

Answer 8

-time
-stocks
-working below full capacity
-availability of factors of production
-ease of entry into the market
-availability of substitutes

Question 9

How does the short term impact PES?

Answer 9

One factor of production is fixed so they may not be able to instantly increase production

Question 10

How does stocks impact PES?

Answer 10

If a business has a stockpile of goods, they will be more elastic as they can use their stockpiles

Question 11

How does ease of entry into the market affect PES?

Answer 11

Large start up costs can make it hard to increase supply