2.6 PRICE ELASTICITY OF SUPPLY Flashcards
1
Q
what is PES
A
the responsiveness of supply to a change in price
2
Q
if PES is elastic what can happen to supply
A
it can react quickly to changes in price
3
Q
if PES is inelastic what will happen to supply
A
it will be difficult for suppliers to react swiftly to changes in price
4
Q
determinants of PES
A
1) time period
2) supply of raw materials
3) number and closeness of substitutes
4) spare capacity
5) number of firms in the market
6) ability to switch production
7) stock levels
