PES Price Elasticity of Supply 0.0 / 5 ? EconomicsCompetitive marketsASOCR Created by: SimoneCreated on: 05-01-14 14:19 Define PES measures the responsiveness of quantity supplied to changes in price 1 of 14 Is PES positive or negative? Always positive 2 of 14 PES is inelastic.. values? 0 to 1 3 of 14 PES is elastic.. values? greater than 1 4 of 14 What is meant by supply elastic producers can increase output without a rise in cost 5 of 14 What is meant by supply inelastic firms find it hard to change production in a given time period 6 of 14 Unitary supply = = 1 7 of 14 Business Relevance? stock decisions and impact on TR 8 of 14 Explain stock decisions? if a price rise is expected in the short term, firms should hold stock 9 of 14 Explain impact on TR? firms will try to make their supply as elastic as possible to cash in on price rises and sell more 10 of 14 Determinants of PES? 1. Spare capacity 2. time 3.availability of substitutes 11 of 14 Explain spare capacity if there is plenty of spare capacity the firm should be able to increase output without a rise in costs = elastic 12 of 14 explain time more elastic in long term as firms can enter/leave industry, more capital can be acquired and technological advances 13 of 14 explain availability of substitutes producer substitutes i.e. goods that a producer can produce as alternatives = more elastic 14 of 14
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