price elasticity of supply

AS Unit F581:Markets in action Competitive markets

and how they work

Price elasticity of supply (PES)

Definition and formula

Definition The responsiveness of quantity

supplied to a change in price

Definition The responsiveness of quantity

supplied to a change in price

FormulaFormula

price in change percentagesupplied quantity in change percentage

Terminology

Price elastic supplyWhere the percentage change in quantity supplied is greater than

the percentage change in pricePED is less than 1

Price elastic supplyWhere the percentage change in quantity supplied is greater than

the percentage change in pricePED is less than 1

Price inelastic supplyWhere the percentage change in

quantity supplied is less than the percentage change in pricePED is between 1 and zero

Price inelastic supplyWhere the percentage change in

quantity supplied is less than the percentage change in pricePED is between 1 and zero

Determinants of PES

Time period in

production process

Time period in

production process

Stock levelsStock levels

Marginal cost

Marginal cost

Spare capacitySpare

capacity

Ease of factor

substitution

Ease of factor

substitution

Cost of factor

substitution

Cost of factor

substitution

Task 1In pairs, prepare

a short presentation on PES using a blog entry on Tutor2u

Present your findings to the rest of the group using KeyNote

Task 2In your table groups, talk through the past paper questions on PESHow will you show analysis (AO3) and evaluation (AO4)?Individually, write up answers for assessment