Price Elasticity of Supply (Week 4) Flashcards
1
Q
What does price elasticity of supply measure
A
Of how the quantity supplied of a good responds to a change in its price
2
Q
How is price elasticity of supply calculated
A
% change in quantity supplied / % change in price
3
Q
Is PES generally positive or negative
A
Positive as the higher the price, the greater the supply
4
Q
If the value of PES is greater than 1 (>1), the supply of the good is…
A
Elastic
5
Q
What does it mean when PES is elastic
A
A % change in price will cause a larger % change in quantity supplied
6
Q
The higher the PES value…
A
The more elastic supply is for the good
7
Q
What does price elasticity of supply show
A
How supply changes with price
