Price Elasticity of Supply (PES)

The price elasticity of supply is:

• the change in supply given a change in price.

• how the price changes given a change in quantity

  supplied.

• the change in quantity supplied given a change in price.

• the percentage change in quantity supplied given a

  change in price.

The price of a product falls from $5 to $4.

As a result, its supply in a given time period falls from 800 units to 700 units.

What is the PES?

• 0.71

• 0.625

• 1.6

• 0.5

A firm supplies 10 units of a product at $48 per unit.

If the PES is 4, how many units will the firm supply at a price of $60 per unit?

• 10

• 20

• 40

• 60

Which of these estimates of PES is most likely to apply to the supply of raw coffee beans?

• 0.1

• 1

• 1.1

• 10

The short-run supply of fresh flowers for export from Kenya

to the UK is less price elastic than the supply of green beans.

Why is this?

• The price of cut flowers fluctuates more than the price of green beans.

• Fresh flowers are purchased for special occasions.

• Fresh flowers only last a few days.

• Fresh flowers cannot be stored for as long as green beans.

Which of these products is most likely to have a perfectly elastic PES?

• seats to watch athletics finals at the Olympic Games

• music downloads to an electronic device

• an original painting by the famous French artist Monet

• a limited edition Hublot wristwatch