13- Price Elasticity Of Supply

Question 1

PES definition

Answer 1

Measures the responsiveness of quantity supplied given a change in price

Question 2

PES equation

Answer 2

% change of quantity supplied/ % change of price

Question 3

What does it mean if PES=0?

Answer 3

Supply is perfectly inelastic

Question 4

What does it mean if PES<1?

Answer 4

Supply is inelastic

Question 5

What does it mean if PES=1?

Answer 5

Supply is unitary elastic

Question 6

What does it mean if PES>1?

Answer 6

Supply is elastic

Question 7

What does it mean if PES= infinity

Answer 7

Supply is perfectly elastic

Question 8

Elastic supply definition

Answer 8

When there is more of a change in quantity supplied than price

Question 9

Inelastic supply definition

Answer 9

When there is more of a change in price than quantity supplied

Question 10

Perfectly elastic supply definition

Answer 10

When producers are prepared to supply any amount at a given price

Question 11

Perfectly inelastic supply definition

Answer 11

If there is no response in quantity to a change in price

Question 12

Unitary elastic supply definition

Answer 12

If the percentage change in quantity supplied is the same as price

Question 13

Supply curve for Perfectly inelastic supply

Answer 13

Vertical supply curve

Question 14

Supply curve for perfectly elastic supply

Answer 14

Horizontal supply curve

Question 15

Supply curve for inelastic supply

Answer 15

Steep supply curve

Question 16

Supply curve for elastic supply

Answer 16

Shallow supply curve

Question 17

Supply curve for unitary elastic supply

Answer 17

Straight from the origin

Question 18

Determinants of PES

Answer 18

• Production lag
• Stocks
• Availability of Substitutes- if there are many substitutes then producers can quickly alter the pattern of production if prices fall
• Spare capacity
• ## Time