Price Elasticity of Supply Flashcards
1
Q
What is PES?
A
Responsivness of supply to a change in price
2
Q
What is inelastic supply?
A
Change in price leads to a proportionally smaller change in the quantity supplied
3
Q
What is elastic supply?
A
Change in price leads to a proportionally greater change in the quantity supplied
4
Q
What does a PES of >1 mean?
A
The quantity supplied is elastic
5
Q
What does a PES of 0 mean?
A
It is perfectley inelastic
6
Q
What does a PES of infinity mean?
A
It is perfectley elastic
7
Q
What does a PES of 1 mean?
A
It is unitarily elastic
8
Q
What are the factors influencing PES? (FAST)
A
-Factors of production
-Availibility of stocks
-Spare capacity
-Time
9
Q
How do you calculate PES?
A
Precentage change in quantity supplied/ Precentage change in price
