PES Flashcards
1
Q
What is PES
A
Responsiveness of supply to a change in price
2
Q
PES equation
A
%QS/%change in p
3
Q
PES between 0-1
A
relatively price inelastic supply
4
Q
PES is 1
A
unit elasticity
5
Q
PES>1
A
relatively price elastic supply
6
Q
Determinants of PES
A
Production period – shorter = higher PES
(t)Ime – PES increases over time
Storage – larger storage = high PES
Spare capacity – difference between what a firm can produce and what it is producing – larger spare capacity = higher PES
