Define price elasticity of supply (PES) .

Price elasticity of supply (PES) measures how responsive the quantity supplied of a good is to a change in its price.

What formula is used to calculate PES?

PES is calculated as the percentage change in quantity supplied divided by the percentage change in price .

Define the law of supply .

The law of supply states that, ceteris paribus, an increase in price leads producers to increase the quantity supplied, and vice versa.

Define perfectly inelastic supply .

Perfectly inelastic supply (PES = 0) is when the quantity supplied is completely unresponsive to a change in price.

When PES lies between 0 and 1, supply is described as relatively .

When PES lies between 0 and 1, supply is described as relatively inelastic .

True or False? A PES value greater than 1 means supply is relatively inelastic.

False. A PES value greater than 1 means supply is relatively elastic , as quantity supplied changes more than proportionally to price.

Define relatively elastic supply .

Relatively elastic supply (PES > 1) is when the percentage change in quantity supplied is more than proportional to the percentage change in price.

How does the ability to store goods affect a product's PES?

Goods that can be easily stored have a higher (more elastic) PES , because producers can quickly increase supply from stock.

Supply tends to be more elastic in the run, when producers can change all their factors of production.

Supply tends to be more elastic in the long run, when producers can change all their factors of production.

True or False? When answering a PES question you should think like a consumer.

False. You should think like a producer , since PES concerns the responsiveness of quantity supplied, not consumer demand.

Do primary commodities or manufactured products tend to have a higher PES?

Manufactured products tend to have a higher (more elastic) PES than primary commodities.

Why do primary commodities tend to have a lower PES than manufactured goods?

Primary commodities have a lower PES because they take longer to produce , are harder to store , and have limited spare capacity .

IBEconomicsDPHLFlashcards2. Microeconomics2.6 Price Elasticity of Supply (PES)

2.6 Price Elasticity of Supply (PES) (DP IB Economics: HL): Flashcards

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Define price elasticity of supply (PES).

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Define price elasticity of supply (PES).
Price elasticity of supply (PES) measures how responsive the quantity supplied of a good is to a change in its price.
What formula is used to calculate PES?
PES is calculated as the percentage change in quantity supplied divided by the percentage change in price.
Define the law of supply.
The law of supply states that, ceteris paribus, an increase in price leads producers to increase the quantity supplied, and vice versa.
Define perfectly inelastic supply.
Perfectly inelastic supply (PES = 0) is when the quantity supplied is completely unresponsive to a change in price.
When PES lies between 0 and 1, supply is described as relatively .
When PES lies between 0 and 1, supply is described as relatively inelastic.
True or False?
A PES value greater than 1 means supply is relatively inelastic.
False.
A PES value greater than 1 means supply is relatively elastic, as quantity supplied changes more than proportionally to price.
Define relatively elastic supply.
Relatively elastic supply (PES > 1) is when the percentage change in quantity supplied is more than proportional to the percentage change in price.
How does the ability to store goods affect a product's PES?
Goods that can be easily stored have a higher (more elastic) PES, because producers can quickly increase supply from stock.
Supply tends to be more elastic in the run, when producers can change all their factors of production.
Supply tends to be more elastic in the long run, when producers can change all their factors of production.
True or False?
When answering a PES question you should think like a consumer.
False.
You should think like a producer, since PES concerns the responsiveness of quantity supplied, not consumer demand.
Do primary commodities or manufactured products tend to have a higher PES?
Manufactured products tend to have a higher (more elastic) PES than primary commodities.
Why do primary commodities tend to have a lower PES than manufactured goods?
Primary commodities have a lower PES because they take longer to produce, are harder to store, and have limited spare capacity.

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