Price elasticity Supply

Question 1

What is the formular for PES

Answer 1

PES=
% change quantity supplied / % change price

Question 2

What are the factor for PES

ESSTM

Answer 2

-Ease of F.O.P
-Stock levels (Hi=PE, LO=P I.E.)
-Spare capacity (Hi=PE, LO=P I.E.)
-Time(Long=PE, Short=P I.E.)
-Manufactured or Primary(M=PE., P= P I.E.)

Question 3

How does Time affect the PES

Answer 3

Short run will means that it is inelastic
Long run will means that it is elastic
–> as more time to adjust to change any situation

Question 4

How does space capacity affect the PES

Answer 4

High level of spare capacity
–>Elastic

Low level
–>Inelastic

Question 5

Will primary sector goods be inelastic or elastic

Answer 5

Mostly inelastic as raw material availability for rare luxury jewel like Diamonds

–>and also Time/ Space capacity for fruits, vegetable, fish as they won’t be fresh

Question 6

Will secondary sector goods be elastic or inelastic

Answer 6

Elastic
High Barrier to entry e.g phone
Raw material is high

Question 7

How does the good being Manufactured or Primary affect PES?

Answer 7

-Manufactured = PE
-Primary = P I.E.

Question 8

How does stock levels affect PES?

Answer 8

-High = PE
-Low = P I.E.