# Price elasticity of supply

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• Created on: 21-11-12 17:51
What is price elasticity of supply?
The responsiveness of the quantity supplied to a change in the price of the product.
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What is the formula for price elasticity of supply?
% change in quantity supplied/ % change in price
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When supply is ______ there are factors limiting the supply response in a given time period.
Inelastic
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When supply is _____, firms can respond quickly to a change in demand
Elastic
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PES - between 0 and 1 - supply is?
inelastic
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PES - greater than 1 - supply is?
Elastic
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PES - equal to 1 - supply is?
unit elastic
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What is meant by 'buffer stock'?
Stock that can be released if market conditions change
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What type of business do NOT have buffer stock?
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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
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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
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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
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Supply is likely to be more elastic...
The longer the time period
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In some agricultural industries, supply is _____ and determined by planting decisions made months before.
Fixed
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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
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## 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.

### Card 4

#### Front

When supply is _____, firms can respond quickly to a change in demand

### Card 5

#### Front

PES - between 0 and 1 - supply is?