PES - price elasticity of supply

What does price elasticity of supply mean?

responsiveness of quantity supplied given a price change

What are factors that affect PES?

PSSST - production lag, stock, substitutability of FoPs, spare capacity, Time Period

when is supply elastic (calculation)

PES > 1

when is supply inelastic (calculation)

PES < 1

Does higher production lag increase elasticity?

No

Does a higher amount of stock increase elasticity?

Yes

Does more spare capacity increase elasticity?

Yes

Does improved Substitutability of factors of production increase elasticity?

Yes

Does a longer time period increase elasticity?

Yes

When is PES negative ?

never

When is PES positive?

always

When is supply perfectly elastic (calculation)?

when PES = infinity

When is supply perfectly inelastic (calculation)?

when PES = 0

When is supply unitarily elastic? (calculation)

when PES = 1