15) Price Elasticity Of Supply

Question 0

Whats the formula of PES

Answer 0

Percentage change in Qs ➗ percentage change in price

Question 1

What does pes mean

Answer 1

⚫️responsiveness
➡️of quantity supplied
➡️to a change in price

Question 2

⚫️price if product rise from £5 to £7(40%)
⚫️extension of supply from 800 to 1000(25%)
⚫️whats the PES

Answer 2

⚫️25%➗40%= 0.625

⚫️price unelastic

Question 3

Interpret the PES when its greater than one

Answer 3

⚫️Price elastic
⚫️supply is responsive to a change in price
➡️change in supply
➡️results in a greater change in quantity supplies

Question 4

Interpret the PES when its between 0-1

Answer 4

⚫️price inelastic
➡️supply not responsive to change price
➡️change in price results to proportionately smaller change in quantity supplied

Question 5

When is PES price elastic

Answer 5

⚫️availability of substitutes
➡️If sellers can easily switch between different goods
➡️supply more elastic

⚫️long run, supply more elastic
➡️suppliers can change to producing a good
➡️if given long enough period of time in which to do so.

⚫️more complex and difficult the product
➡️less elastic the PES.