price elasticity of supply
DESCRIPTION
TRANSCRIPT
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