Price Elasticity of Supply Flashcards
1
Q
what does price elasticity of supply measure and what is this formula
A
measures the responsiveness of quantity supplied to a change in price
ES = change Qs x P
—————- ————–
Qs change in P
2
Q
On the supply curve what happens if :
Es > 1
A
ELASTIC
% change in quantity is GREATER than
% change in price (therefore responsive)
3
Q
On the supply curve what happens if :
Es < 1
A
INELASTIC
% change in quantity is LESS than
% change in price (therefore not responsive)
4
Q
On the supply curve what happens if :
Es = 1
A
Unitary Elastic (one equals the other)
5
Q
On the supply curve what happens if :
Es = 0
A
perfectly inelastic (no effect on supply)
6
Q
On the supply curve what happens if :
Es = infinity
A
perfectly elastic
