The responsiveness of the quantity supplied to a change in the price of the product.
1 of 15
What is the formula for price elasticity of supply?
% change in quantity supplied/ % change in price
2 of 15
When supply is ______ there are factors limiting the supply response in a given time period.
Inelastic
3 of 15
When supply is _____, firms can respond quickly to a change in demand
Elastic
4 of 15
PES - between 0 and 1 - supply is?
inelastic
5 of 15
PES - greater than 1 - supply is?
Elastic
6 of 15
PES - equal to 1 - supply is?
unit elastic
7 of 15
What is meant by 'buffer stock'?
Stock that can be released if market conditions change
8 of 15
What type of business do NOT have buffer stock?
Service sector businesses e.g. hotels
9 of 15
If stocks or raw materials, components and finished products are high then the firm is able to respond to a change in demand quickly by supplying these stocks onto the market - supply will be?
elastic
10 of 15
Ease of factor substitution - if there is spare capacity, additional workers can be used to produce more output, often in a short period of time, hence supply is ?
relatively elastic
11 of 15
For some types of business, it is the availability of capital that determines whether a firm can increase output. Where new machinery has to be purchased and installed, the elasticity of supply will be?
inelastic
12 of 15
Supply is likely to be more elastic...
The longer the time period
13 of 15
In some agricultural industries, supply is _____ and determined by planting decisions made months before.
Fixed
14 of 15
If there is plenty of _____ then a business should be able to increase its output without a rise in costs therefore supply will be elastic in response to a change in price.
Spare capacity
15 of 15
Other cards in this set
Card 2
Front
What is the formula for price elasticity of supply?
Back
% change in quantity supplied/ % change in price
Card 3
Front
When supply is ______ there are factors limiting the supply response in a given time period.
Back
Card 4
Front
When supply is _____, firms can respond quickly to a change in demand
Comments
No comments have yet been made