PeS Flashcards
1
Q
What is PeS?
A
Price Elasticity of Supply.
It measures the responsiveness of quantity supplied to changes in price.
2
Q
What is the formula for PeS?
A
percentage change in price
3
Q
What happens if PeS is greater than 1?
A
The good is price elastic in supply.
4
Q
What happens if PeS is between 0 and 1?
A
The good is price inelastic in supply.
5
Q
What happens if PeS is equal to 0?
A
The good is perfectly elastic in supply.
6
Q
What happens if PeS equals infinity?
A
The good is perfectly inelastic in supply.
7
Q
What happens if PeS is equal to 1?
A
The good is unitary in supply.
8
Q
What factors affect PeS?
A
Time. Raw material availability. Availability of stocks or stock piling. Availability of spare capacity. Ease of switching between alternative production. Ability to alter production methods.
