2.3 Price Elasticity of Supply. Flashcards
1
Q
Define the term “Price Elasticity of Supply” (PES)
A
PES measures the responsiveness of quantity demanded given a change in price.
2
Q
How can we calculate the PES?
A
%△Qs
________
%△P
3
Q
If the result of the PES is 1 > then the supply is?
A
Price elastic.
4
Q
If the result of the PES is < 1 then the supply is?
A
Price inelastic.
5
Q
If the result of the PES is 0 then the supply is?
A
Perfectly price inelastic.
6
Q
If the result of the PES is ∞ then the supply is?
A
Perfectly price elastic.
7
Q
If the result of the PES is 1 then the supply is?
A
Unit price elastic.
8
Q
What determines whether supply for a good/service is price elastic or price inelastic?
A
(P)roduction Lag
(S)tocks
(S)pare capacity
(S)ubstitutability of factors of productions
(T)ime
