Elasticity of supply

• Price Elasticity of Supply (PES)

  • The law of supply states that when there is an increase in price (ceteris paribus), producers will increase the quantity supplied and vice versa
  • Economists are interested by how much the quantity supplied will increase
• • Price elasticity of supply (PES)reveals how responsive the change in quantity supplied is to a change in price
  • The responsiveness is different for different types of products