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PES and Maximum pricing questions and answers verified 2024
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PES and Maximum pricing questions and answers verified 2024
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PES and Maximum pricingWhat is PES - correct answer ✔Price elasticity of supply is the
responsiveness of supply of a product to a change in price of the product itself
When price of a product changes, how much does supply change by
What is the equation for PES - correct answer ✔PES = % change in quantity
supplied / % change in price
When is PES price elastic / inelastic - correct answer ✔Price inelastic supply
- S: <1
Price elastic: S>1
Unitary elasticity =1
Examples of perfectly elastic supply - correct answer ✔Aeroplane tickets,
cinema tickets, night clubs
When is PES elastic - correct answer ✔If there is a quick production time, a
lot of fast moving consumer goods
Anything where there is a lot of stock being held in a warehouse
Raw materials are redily available
When is PES inelastic - correct answer ✔Takes longer time to manufacture,
produce or grow
The property market, you can't just build houses
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