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7 Cards in this Set
- Front
- Back
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Price elasticity of supply |
% change in quantity supplied/ %change in price |
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Short run/ long run |
How many goods a company can produce in a short/large amount of time |
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Price elastic supply |
Company can quickly produce goods to meet demand, PES>1 |
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Perfectly elastic supply |
Company can produce an infinite number of goods to meet new demand, PES=infinite |
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Price inelastic supply |
Company cannot produce goods quick enough to meet demand, PES<1 |
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Perfectly inelastic supply |
Company cannot produce any more goods than they currently do, PES=0 |
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The 5 determinants of PES |
-spare capacity -level of stocks of finished product -perishability -state of economy(causes spare capacity) -time period |
