Price Elasticity of Supply

What does PES stand for?

• Price Elasticity of Stock

• Price Elasticity of Sales

• Price Elasticity of Supply

• Price Elasticity of Service

Price elasticity of supply is the responsiveness of

• demand to a change in price.

• price to a change in supply.

• quantity supplied to a change in price.

• price to a change in supply.

If the firm have more spare capacity, then it will be possible for the firm to increase supply. This means supply is

• Elastic

• Inelastic

• Unitary elasticity

When the price is more and the firms are able to produce more to take the benefit of this increase in price, then supply is said to be....

• Elastic

• Inelastic

• Unitary elasticity

• None of the above

Products like pencils, books, and other school stationaries are easy to store in a warehouse. If a firm producing such goods and has a good warehousing facilities and can supply more when prices are rising, then supply will be

• Inelastic

• Unitary elasticity

• Elastic

• None of the above

Firms producing perishable items with less warehousing facility will be able to respond to increase in price and and they can supply more to meet the increase in demand. Is the statement true or false

• False

• True

If there are more firms producing more luxury items then supply of luxury items will increase. In such case, if there is any increase in price, the firms can supply more to make use of this rise in price.

• True

• False

In agriculture farming, it takes time to increase the supply of fruits and vegetables as the harvesting needs time. Hence supply will be less responsive to increase in price,nad supply will be ...

• Inelastic

• Elastic

• Unitary Elasticity

• None of the above

Supply is more price elastic if more time is available as the firms can adjust the supply and increase the supply when price are increasing.

• True

• False

Factory owner Susan has calculated that her PES is 3. This number means that,

• if price were to rise by 2% Susan would supply 6% more products.

• If price were to rise by 2% Susan would supply 3% more products.

• the percentage change in price is three times the percentage change in quantity.

• in the PES formula, the top number is smaller than the bottom number.