2.3 supply Flashcards
what is supply
he quantity of a good or service that producer are willing and able to supply at a given price in a given time period
what is the relationship between price and supply
as price increases, supply increases as price falls supply falls.
what is a market supply
the total supply of a good or service. found by adding individual supply
what are the consequences of a shift in supply
economies of scale
efficiency
sales
what does inelastic supply mean
he price change will lead to a small change in supply
the PES value will be between 0-1
what does elastic supply mean
the price change will lead to a larger change in supply
the PES value will be between 1 and infinity
how do you calculate PES
%change in quantity supplied / %change in price
how does PES affect consumers
- if supply is inelastic, it will make it more difficult to buy a product without paying more
- PES is elastic it is easier to obtain the product but less flexibility in negotiating price
how does PES affect producers
- adapting latest tech
- keeping large amounts of stock
- training employees in more than once job
