Price Elasticity of Supply Flashcards

1
Q

What is PES?

A

Responsivness of supply to a change in price

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2
Q

What is inelastic supply?

A

Change in price leads to a proportionally smaller change in the quantity supplied

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3
Q

What is elastic supply?

A

Change in price leads to a proportionally greater change in the quantity supplied

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4
Q

What does a PES of >1 mean?

A

The quantity supplied is elastic

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5
Q

What does a PES of 0 mean?

A

It is perfectley inelastic

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6
Q

What does a PES of infinity mean?

A

It is perfectley elastic

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7
Q

What does a PES of 1 mean?

A

It is unitarily elastic

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8
Q

What are the factors influencing PES?

A

-Factors of production
-Availibility of stocks
-Spare capacity
-Time

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9
Q

How do you calculate PES?

A

Precentage change in quantity supplied/ Precentage change in price

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