2)Price elasticity of supply

PES definition

measures the responsiveness of quantity supplied to a change in price

PES formula

%change in quantity supplied/%change in price

Will PES always be positive or negative

positive as whatever happens to price it will happen to quantity supplied

Elastic

if the PES is more than one

Inelastic

If the PES is less than 1

Unitary elastic

is 1 and will only happen if both bottom and top are the same

Factors which effect PES

Spare Capacity,Availabilty of factors of production,State of economy,Stockpiles and perishability and time period-SASST

Spare Capacity

If a business has more spare capacity then it will be more price elastic as they can produce more

Availability of factors of production

the more available FoP is the more elastic it will be because it is easier to find the resources;

State of economy

The worse the state of the economy is the more elastic supply will be

Stockpile definition

stock of goods held in a reserve

Stockpiles and Perishability

If the product is less perishable there will be more stockpiles of it and will be elastic

Short run definition

when at least one factor of production is fixed

Long Run definition

when all factors of production can change

Time

in the short run it is inelastic because one of the factors of production is fixed but vice versa for long run

Perfectly inelastic

is 0

Perfectly elastic

is infinity