Price elasticity of supplySyllabus: Explain the concept of price elasticity of supply, understanding that it involves responsiveness of quantity supplied to a change in price along a given supply curve.
Price elasticity of supply (PES)
A measure of the responsiveness of the quantity of a good supplied to changes in its own price.
Once again the number shows the elasticity (amount) but this time the sign is always positive (Law of Supply).
PES - formula
The value for price elasticity of supply is calculated and defined as:
(Supper on the Plate?)
PES is the % change in quantity supplied of a good or service divided by the % change in its price.