Elasticity Of Supply

Question 1

Definition of PES

Answer 1

PES measures the responsiveness of quantity supplied given a change in price.

Question 2

PES equation

Answer 2

%change quantity supplied/percentage change in price

Question 3

PES outputs

Answer 3

• > 1 supply Is price elastic
• <1 supply is price inelastic
• 0 supply is perfectly price inelastic
• Infinity Supply is perfectly price elastic
  -1 Supply is unit price elastic

Question 4

PES PSSST

Answer 4

(P)roduction lag- longer-inelastic
(S)tocks
(S)pare capacity
(S)ubstitutability of Fops
(T)ime- short run- inelastic-can’t change production.