PES

• Price elasticity of supply measures the responsiveness of quantity supplied given a change in price.
• The equation for price elasticity of supply is similar to the equation for price elasticity of demand, but with the percentage change in quantity supplied over the percentage change in price.
• If the percentage change in quantity supplied is greater than the percentage change in price, it indicates that supply is price elastic.
• Supply is price inelastic when the quantity supplied increases by more than the increase in price.
• If the production lag for a good or service is short, then supply is price elastic.
• If the percentage change in quantity supplied is less than the percentage change in price, it indicates that supply is price inelastic.