Price Elasticity of Supply

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  • Price Elasticity of Supply.
    • A measure of how the quantity supplied of a good responds to a change in price
    • Calculated using :
      • % change in QS / % change in price
      • Answer is generally positive as the higher the price the greater the supply.
    • Can be elastic or inelastic.
      • If the value is greater than one, it is elastic.
      • If PES = 1, quantity supplied is equal to price.
      • If the value is between 0 and 1, it is inelastic.
        • Perfectly inelastic = value of 0.


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