Elasticity of Supply

PES is defined as:

• How price sensitive producers are

• The quantity a producer supplies

• The responsiveness of quantity supplied to a change in price

• When supply falls when prices fall

The formula for PES is:

• % Δ P / % Δ QS

• % Δ P / % Δ QS x 100

• % Δ QS / % Δ P x 100

• % Δ QS / % Δ P

What does the following diagram illustrate?

• Elastic demand

• Elastic supply

• Inelastic demand

• Inelastic supply

The price of a product changes from £120 to £140. As a result, the quantity supplied changed from 80 to 40. What is the PES?

• 2.9

• 0.3

• -0.3

• -2.9

A price change from £60 to £90 has led to quantity supplied falling from 240 to 180. Calculate the PES.

• -2

• -0.5

• 2

• 0.5

Would you expect a harvest of potatoes to be elastic or inelastic supply?

• Elastic

• Inelastic

In simple terms, price inelastic supply means:

• It is easy to obtain more supply of a product

• It is very difficult to obtain more supply of a product

In simple terms, price elastic supply means:

• It is easy to obtain more supply of a product

• It is very difficult to obtain more supply of a product

A 10% increase in the price of grapes leads to a 4% increase in the quantity supplied. What is the price elasticity of supply of grapes in this case?

• -2.5

• +0.4

• +2.5

• +4

When a factory is running at full capacity, it means all its machinery is ________ utilised and the supply of the good will be price _______. 

• fully, elastic
• fully, inelastic
• under, elastic
• under, inelastic