. PES is the responsiveness of quantity supplied to a change in price.
. PES= %Δ qty supplied ÷ %Δ price
. Inelastic Supply
1) It has a PES less than 1
2) A large price change will have little effect on the amount supplied.
. PES= %Δ qty supplied ÷ %Δ price
. Inelastic Supply
1) It has a PES less than 1
2) A large price change will have little effect on the amount supplied.
. Elastic Supply
1) It has a PES more than 1
2) A large price change will have a large effect on the amount supplied.
1) It has a PES more than 1
2) A large price change will have a large effect on the amount supplied.
. Factors that affect PES:
1) Time
2) Availability of resources
3) Supply available to meet demand
4) Spare production capacity available
5) Factor substitution available
1) Time
2) Availability of resources
3) Supply available to meet demand
4) Spare production capacity available
5) Factor substitution available