Th1.2: PES

Question 1

PES definition

Answer 1

The responsiveness of quantity supplied to a change in price

Question 2

PES formula

Answer 2

     % change in price

Question 3

What PES is it when PES = 1?

Answer 3

unitary elastic

Question 4

What PES is it when PES > 1?

Answer 4

relatively elastic

Question 5

What PES is it when PES < 1?

Answer 5

relatively inelastic

Question 6

What PES is it when PES = infinity

Answer 6

perfectly elastic

Question 7

What PES is it when PES = 0

Answer 7

perfectly inelastic

Question 8

What does unitary elastic PES mean?

Answer 8

quantity supplied changes by exactly same percentage as price

Question 9

What does relatively elastic PES mean?

Answer 9

quantity supplied changes by a larger percentage than price so supply is relatively responsive to price

Question 10

What does relatively inelastic PES mean?

Answer 10

quantity supplied changes by a smaller percentage than price so supply is relatively unresponsive to price

Question 11

What does perfectly elastic PES mean?

Answer 11

a change in prices means that quantity supplied falls to 0 and supply is very responsive to price

Question 12

What does perfectly inelastic PES mean?

Answer 12

a change in price has no effect on output so demand is completely unresponsive to price

Question 13

What does unitary elastic PES look like?

Answer 13

steeper than elastic but more sloping than inelastic

Question 14

What does relatively elastic PES look like?

Answer 14

more sloping

Question 15

What does relatively inelastic PES look like?

Answer 15

steep

Question 16

What does perfectly elastic PES look like?

Answer 16

a horizontal line

Question 17

What does perfectly inelastic PES look like?

Answer 17

a vertical line

Question 18

Refer to PP

Look at Graph 10. Which line is what type of PES curve?

Answer 18

S1 - unitary elastic
S2 - relatively elastic
S3 - relatively inelastic