1.2.5 Elasticity of supply Flashcards

1
Q

Elastic supply

A

produces can increase their output without a rise in cost or time delay

PES= more than 1

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

Inelastic supply

A

firms find it hard to change the production after a change in price

PES= less than 1

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

Price elasticity of supply

A

PES= %change in QS
%change in price

PES measures the relationship between change in QS and a change in price

•PES=more than 1 supply is price elastic
•PES=less than 1 supply is price inelastic
•PES=0 supply is perfectly inelastic
•PES=infinity supply is perfectly elastic

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

Factors that affect elasticity of supply

A

•Spare production capacity
•Stocks of finished products and components
•Ease and cost of factor substitution/factor mobility
•Time period and production speed

How well did you know this?
1
Not at all
2
3
4
5
Perfectly