1.2.5 Elasticity of supply Flashcards
1
Q
What does PeS tell us?
A
PeS tells us the responsiveness to Quantity supplied to a change in price
2
Q
Formulae for PeS:
A
%Change in Qs
PeS = ————————-
%Change in P
3
Q
What values can you get for PeS?
A
PeS values will always be positive. The positive sign in front of the PeS indicates the direct relationship between price and quantity supplied.
4
Q
What are the factors that affect PeS (Hint: PSSST)
A
P roduction Lag
S tocks
S pare capacity
S ubstitutability of FoP
T ime
