1. Price elasticity of supply
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2. Price elasticity of supply (PES)
PES measures the responsiveness of quantity supplied to a change in price
Formula:
percentage change in quantity supplied
percentage change in price
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3. Elastic or inelastic? Elastic supply
If the firm is able to increase supply quickly in response to a change in price, then supply is said to be price elastic in supply
Inelastic supply
If the firm is unable to increase supply quickly in response to a change in price, then supply is said to be price inelastic in supply
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4. Factors determining PES
Time
Weather conditions
Ease of access to specialist equipment
Planning permission and other government restrictions
Stocks
Spare capacity
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5. Short and long-run supply
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