Economics 2.6 (PES)

Question 1

Price elasticity of supply (PES)

Answer 1

A measure of the responsiveness of the quantity supplied of a good/service to a change in its price

Question 2

Price ELASTIC supply

Answer 2

Where a change in the price of a good/service leads to a proportionately larger change in the quantity supplied of the good/service in the same direction (PES > 1)

Question 3

Price INELASTIC supply

Answer 3

Where a change in the price of a good/service leads to a proportionately smaller change in the quantity supplied of the good/service in the same direction (PES < 1)

Question 4

PERFECTLY elastic supply

Answer 4

Occurs with a horizontal supply curve signifying that any amount can be offered at a particular price (PES is infinite)

Question 5

PERFECTLY inelastic supply

Answer 5

Where a change in the price of a good/service leads to no change in the quantity supplied of the good/service (PES is 0)

Question 6

Unitary elastic supply

Answer 6

When a change in the price of a good/service leads to an equal proportionate change in the quantity supplied of the good/service (PES = 1)