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PES c. questions and answers verified 2024
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PES c. questions and answers verified 2024
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PES (supply elasticity )Definition of PES - correct answer ✔Measure the responsiveness of quantity
supplied to changes in price
What does PES do - correct answer ✔It looks at the behaviours of firms and
not consumers
Formula of PES - correct answer ✔%change in quantity supplied/ % change
in price
What are answers generally in PES - correct answer ✔They are usually
positive- elastic. A price rise will signal to firms to make more of the product
(as profit potential is higher)
Refer to diagrams - correct answer ✔Of elastic and inelastic supply curve
Examples of inelastic supply - correct answer ✔Crops and Housing
- These goods are PES inelastic
- Since it takes time to produce these goods, so as price rises, supply stays
the same in the short run
PES factors - correct answer ✔- Spare capacity
- Stocks of raw materials
- Factor Substitution
- Occupationally mobile
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