Elasticity

Price elasticity of supply (PES)

• PES measures the way in which quantity supplied changes when price changes.
• PES= % change in QS/ % change in price.
• If supply is elastic, producers can increase their output without an increase in cost or a time delay (PES>1).
• If supply is inelastic, it is difficult for suppliers to change their production in a given time period (PES<1).

Factors…