elasticity of supply Flashcards
1
Q
pes
A
measures the degree of responsiveness of QS of a product
2
Q
price elastic supply
A
firms are responsive to changes in price
pes>1
3
Q
price inelastic supply
A
firms are unresponsive to changes in price
pes<1
4
Q
perfectly price inelastic supply
A
change in price has no impact on QS
|= shape on diagram
pes=0
5
Q
perfectly price elastic supply
A
QS can change without any corresponding change in price
–= shape on diagram
pes= infinity
6
Q
unitary price elastic supply
A
percentage change in QS matches change in price
pes=1
7
Q
determinants of pes
A
- time
- rate at which costs increase
- mobility of factors of production
- unused capacity
- ability to store
8
Q
unused capacity
A
degree of spare productive capacity
9
Q
marginal cost is the change in total cost/ change in output
A
yasss
