price elasticity supplied

Question 1

pes

Answer 1

price elasticity of supply measures the responsiveness of quantity supplied to a change in price
equation= % change in quantity supplied/%change in price

Question 2

interpreting pes

Answer 2

value is always positive as variables are always co existing in the same way
whenever price decreases so does quantity supplies same with price increasing this will cause quantity demanded to increase
it will either be a negative/negative
or a positive/positive

Question 3

elastic supply equation

Answer 3

larger than 1means it is price elastic
the top formula is bigger than the bottom
percentage change in quantity supplied is bigger than percentage change supplied
suggesting elasticity

Question 4

inelastic supply

Answer 4

the value will be from 0-1 suggesting price inelasticity
in this instance
the top of the formula is smaller than the bottom
percentage change in quantity supplies is less that percentage change in price
If there’s a % change in price will lead to a smaller % change in quantity supplied

Question 5

unitary elastic supply

Answer 5

if our pes is exactly 1 supply is unitary elastic
the top of our formula is the same size as the bottom
therefore the % change in price will lead to the same % change in quantity supplied

Question 6

elastic and inelastic

Answer 6

relatively elastic supply curves will have a flatter upward slope
however relatively inelastic supply curves will have a steep upwards slope