PES 1.2.5 Flashcards
1
Q
Define PES?
A
PES measures the responsiveness of quantity supplied given a change in price.
2
Q
How do you calculate PES?
A
Percentage change in quantity supplied/percentage change in price.
3
Q
Why are the values of PES always positive?
A
PES has a positive relationship because when price increases so does supply and vice-versa.
4
Q
Price elasticity of supply?
A
>1-supply is price elastic <1-supply is price inelastic 0-supply is perfectly inelastic infinity-supply is perfectly elastic 1-price is unit price elastic
5
Q
What are the determinants of PES?
A
Production log Stock Spare capacity Substitutability of CELL Time
