Price elasticity of supply Flashcards
1
Q
What is price elasticity of supply?
A
Price elasticity of supply is the responsiveness of the quantity supplied when there is a change in price
2
Q
What is the equation for price elasticity of supply (hint: Q before you P)
A
%change of quantity supplied / %change of price
(%change=(actual change / original) x100)
3
Q
What are the factors that affect price elasticity of supply?
A
- Length of production period
- Supply of raw materials
- Spare capacity
-Storage/stockpiles
4
Q
What is price inelastic supply?
A
Where the amount of producers has a less than proportional change compared to the change in price
5
Q
What is price elastic supply?
A
Where the number of producer has a more than proportional change compared to the price
