Price Elasticity Of Supply Flashcards
1
Q
What is price elasticity of supply?
A
How responsiveness quantity supplied is to a change in price
2
Q
How do you calculate price elasticity of supply?
A
% change in quantity supplied / % change in price
3
Q
What does it mean (in real terms) when the price elasticity of supply is elastic?
A
Producers can increase their output without a rise in cost or a time delay
4
Q
What does it mean (in real terms) when the price elasticity of supply is inelastic?
A
Firms struggle to change their production in a given time period
5
Q
What are the five factors of PES?
A
(PSSST)
- production lag
- stocks
- spare capacity
- time period
