Price Elasticity of Supply

Question 1

What is the equation of PES?

Answer 1

% change in quantity supplied divided by the % change in price

Question 2

What is the definition of PES?

Answer 2

The responsiveness of quantity supplied to a change in price

Question 3

PES is 0

Answer 3

Perfectly inelastic

Question 4

What does it mean when a good is perfectly elastic

Answer 4

Supply is fixed

Question 5

When is a good perfectly elastic?

Answer 5

PES=0

Question 6

When is PES between -1 and 1

Answer 6

Inelastic

Question 7

What does it mean when a good is inelastic?

Answer 7

Supply will increase at a lesser proportion to price

Question 8

When is a good inelastic?

Answer 8

PES is between -1 and 1

Question 9

PES is 1

Answer 9

Unitary elastic

Question 10

What does it mean when a good is unitary elastic?

Answer 10

Increasing price will lead to a proportional increase in supply

Question 11

When is a good unitary elastic?

Answer 11

PES = 1

Question 12

PES is larger than 1 and less than -1

Answer 12

Elastic

Question 13

What does it mean when a good is elastic?

Answer 13

A rise in prices will lead to an increase in supply to a greater proportion