Elasticity of supply

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  • Created by: lizaloo98
  • Created on: 07-04-16 22:26
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  • Elasticity of Supply
    • defined
      • the responsiveness of quantity demanded to a change in price
    • formula
      • percentage change in quantity supplied over percentage change in price
    • determinants
      • Availability of factors of production
        • the more available the more elastic as it increases productivity
      • Time period
        • the longer the more elastic as they have more time to respond to changes in price
      • Availability of stock
        • the more availability the more elastic as they can respond quicker to changes in price
    • Up to three marks for comments such as - supply tends to be price inelastic in the short term where it is difficult to switch production - over time supply is becoming (more) price elastic - the application of PES figures may be more or less useful depending on changes in other factors - PES changes along the supply line - Businesses do not usually consider PES - Simple statement about figures being estimates (1 mark maximum), expansion with reference to other factors which affect the estimates e.g. cetaris paribus (+1 mark)


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