Price elasticity of supply - PES
What is the PES equation
% Change in quantity supplied / % change in price
What is the effect of stocks on PES
Larger the stocks the larges - the more price elastic supply will be
What is the effect of production lag on PES
Longer the production lag - the more price inelastic PES is
Is PES positive or negative?
PES is always positive
What determines whether PES is elastic or inelastic
PSSST production Lag Stocks Spare Capacity Substitutability of FOPs Time
What is PES in the long-run
Price elastic
What is PES in the short-run
Price inelastic
What is the slope if PES is ♾
Slope is perfectly horizontal
What is the slope if PES is 1
Slope is perfectly vertical
What if PES is ♾
Supply is perfectly price elastic
What if PES is 0
Supply is perfectly price inelastic
What if PES is >1
Supply is price elastic
What if PES is <1
Supply is price inelastic
What if PES is 1
Supply is unit price elastic
What is the effect on spare capacity on PES
The more spare capacity - the more price elastic supply will be
What is the effect of substitutability of FOP on PES
The more substitutable FOPs are - the more price elastic supply is
What is the slope for PES
Upward sloping (Positive relationship)
What is PES
measures the responsiveness of quantity supplied to a change in price