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PES - Coggle Diagram
PES
determinants
less
production lag
, more elastic
greater
stocks
, more elastic
more
spare capacity
, more elastic
more
substitutes of FOP
, more elastic
more
time
, more elastic
types
PES > 1 (relatively elastic)
% change in quantity supplied is more than % change in price
products that are easy to produce and distribute (eg. fidget spinners)
PES < 1 (relatively inelastic)
% change in quantity supplied is less than % change in price
eg. nuclear power
PES = 0 (perfectly inelastic)
no change in quantity supplied when price changes
eg. land, paintings from deceased artists, gold
PES = ∞ (perfectly elastic)
quantity supplied is unlimited at a given price, but no quantity can be supplied at any other price
eg. supply of commodities in world trade
PES = 1 (unit elastic)
change in quantity supplied = change in price
uses
for
firms
to adjust output in order to maximise profit
for
governments
to know if they should intervene in the market
measures the responsiveness of quantity supplied given a change in price
% change in Qs / % change in price