Please enable JavaScript.
Coggle requires JavaScript to display documents.
PES (Supply ELASTIC (Factor mobility (Straight forward production methods)…
PES
-
-
Estimates
• When Pes = infinity, supply is perfectly elastic, following a change in demand
• When Pes = 0, supply is perfectly inelastic
• When Pes < 1, then supply is price inelastic
• When Pes > 1, then supply is price elastic
If supply is inelastic, firms find it hard to change production in a given time period and therefore find it difficult to respond to changing market conditions.
-
If supply is elastic, producers can increase output quite easily, without much of a time delay and a relatively small impact on overall costs.
-