Price Elasticity Of Supply Flashcards
1
Q
PES
A
Measures how much quantity supplied changes in response to a change in price
%change in Qs
————————-
%change in P
2
Q
Is PES positive or negative?
Why?
A
PES is always positive
This is because price and supply are directly proportionate.
3
Q
Elastic Supply
A
PES= 1 to infinity
Producers are very responsive to changes in price
4
Q
Inelastic Supply
A
PES= 0 to 1
Producers are unresponsive to changes in price
5
Q
Unitary elastic Supply
A
PES= 1
6
Q
Perfectly Elastic Supply
A
PES= infinity
Producers are infinity responsive to changes in price
7
Q
Perfectly Inelastic Supply
A
PES= 0
Producers don’t respond to changes in price
8
Q
Factors Influencing PES
A
SASST
State of the economy Availability of factors of production Stockpile and perishability Spare capacity Time
