Price Elasticity Of Demand Flashcards
(9 cards)
1
Q
What is PES
A
Price elasticity of supply is a measure of how the quantity supplied of a good responds to a change in its price
2
Q
PES=
A
Percentage change in quantity supplied/ percentage change in price
3
Q
What if PES >1
A
The supply of good is elastic
4
Q
What if PES<1
A
Inelastic supply
5
Q
What if PES =1
A
Unit elasticity
6
Q
What PES do firms want?
A
A high PES to allow them to respond to change
7
Q
What is short run ?
A
Time period where capacity is fixed
At least one factor is fixed
8
Q
What is long run?
A
All the factors of production are variable
9
Q
What factors affect PES?
A
Perishable goods have inelastic supply
Firms with high stock have elastic supply
