3.3.4 Price elasticity of supply

• Price Elasticity of Supply (PES) measures the responsiveness of the quantity supplied of a good to a change in its price
• A PES value greater than 1 indicates that supply is elastic.


  True
• The formula for PES measures the responsiveness of the quantity supplied of a good to a change in its price.
• PES measures the responsiveness of demand to price changes.

  False
• PES measures the responsiveness of the quantity supplied of a good to a change in its price.
• PES is calculated using the formula: PES = (% Change in Quantity Supplied) / (% Change in Price).
• A PES value of 2 indicates that the supply of cars is elastic.

  True
• The formula for Price Elasticity of Supply (PES) is: $PES =$ \frac{\% \text{ Change \in Quantity Supplied}}{\% \text{ Change \in Price}}
• What does a PES value greater than 1 indicate?

  Elastic supply
• Perfectly elastic supply means the quantity supplied does not change regardless of the price.

  False
• Price Elasticity of Supply (PES) indicates how much the supply changes percentage-wise when the price changes by 1%
• A PES value of 1.5 indicates that the supply is elastic
• Abundant resources make the supply more elastic.


  True
• Arrange the factors influencing PES from most to least controllable by producers:

  1️⃣ Technology

  2️⃣ Storage Capacity

  3️⃣ Availability of Resources

  4️⃣ Time to Produce
• Why does a longer time to produce make supply less elastic?

  Suppliers cannot adjust output quickly
• If the PES is 2, the supply is considered elastic.


  True
• The formula for price elasticity of supply (PES) is \frac{\% \text{ Change \in Quantity Supplied}}{\% \text{ Change \in Price}}
• If the price of cars increases by 5% and the quantity supplied increases by 10%, what is the PES?

  2
• Elastic supply means the quantity supplied responds strongly to price changes.


  True
• What is the value of PES for a perfectly inelastic supply?

  0
• Inelastic supply means the quantity supplied changes less than the price.


  True
• The formula for PES is PES = (% Change in Quantity Supplied) / (% Change in Price)
• Match the factor influencing PES with its impact on elasticity:

  Time to Produce ↔️ Longer time = Less elastic

  Availability of Resources ↔️ Abundant resources = More elastic

  Storage Capacity ↔️ High storage = More elastic

  Technology ↔️ Advanced tech = More elastic
• The value of PES indicates how much the supply changes percentage-wise when the price changes by 1%
• Order the key points about PES:

  1️⃣ Definition of PES and its purpose

  2️⃣ Formula for calculating PES

  3️⃣ Example illustrating how to calculate and interpret PES
• Plentiful resources make supply more elastic.
• What does Price Elasticity of Supply (PES) measure?

  Responsiveness of quantity supplied
• Arrange the types of PES from least to most responsive to price changes:

  1️⃣ Perfectly Inelastic

  2️⃣ Inelastic

  3️⃣ Unit Elastic

  4️⃣ Elastic

  5️⃣ Perfectly Elastic
• Match the PES type with its value and description:

  Elastic ↔️ Greater than 1: Quantity supplied changes more than the price

  Inelastic ↔️ Less than 1: Quantity supplied changes less than the price

  Unit Elastic ↔️ Equal to 1: Quantity supplied changes proportionally

  Perfectly Elastic ↔️ Infinite: Any price change leads to infinite supply change

  Perfectly Inelastic ↔️ Equal to 0: Quantity supplied does not change
• If the price of wheat increases by 10% and the quantity supplied increases by 15%, the PES is 1.5.


  True
• How does a longer time to produce affect the PES?

  Less elastic
• What impact does high storage capacity have on PES?

  More elastic
• The PES formula measures the responsiveness of the quantity supplied of a good to a change in its price
• If the price of wheat increases by 10% and the quantity supplied increases by 15%, what is the PES?

  1.5
• Higher storage capacity enables producers to respond quickly to price changes by releasing stored goods
• What does technology facilitate in production that increases supply elasticity?

  More flexibility and efficiency
• The value of PES indicates how much the supply changes when the price changes by 1%.

  True
• A PES value greater than 1 indicates that the supply is elastic
• Match the PES type with its description:

  Elastic ↔️ Quantity supplied changes more than the price

  Inelastic ↔️ Quantity supplied changes less than the price

  Unit Elastic ↔️ Quantity supplied changes proportionately to the price

  Perfectly Elastic ↔️ Infinite change in quantity with any price change
• Understanding PES is crucial for producers, policymakers, and market stability