Price elasticity of supply

• PES


  The responsiveness of a change in supply to a change in price.
• PES


  % change in Qs / % change in P
• Elastic supply


  Firms can increase supply at little cost; PES>1
• Inelastic supply 


  An increase in supply is expensive and takes a long time; PES<1
• Perfectly inelastic 


  Change in demand cannot be met easily; PES=0
• Perfectly elastic


  Changes in quantity demanded can be met without changing price; PES=∞
• Factors influencing PES:

  • Time scale
  • Spare capacity
  • Level of stocks
  • Substituable factors of production
  • Barriers to entry to the market