Price Elasticity of SUpply

Price Elasticity of Supply (PES)

Price Elasticity of Supply
% change in quantity supplied ÷ % change in price.

Elastic (Supply)
PES > 1; producers can adjust output easily.

Inelastic (Supply)
PES < 1; output is hard to change.

Unit Elastic (Supply)
PES = 1.

Perfectly Elastic (Supply)
Horizontal supply curve.

Perfectly Inelastic (Supply)
Vertical supply curve.

Surplus
Excess supply at a price above equilibrium.

Momentary Supply
Very short run; quantity fixed (perfectly inelastic).

Short-Run Supply
Some inputs fixed; limited flexibility.

Long-Run Supply
All inputs variable; firms can enter/exit.

Alternative Input
Different resource that can substitute in production; increases supply flexibility.