Unit 2.6 · Elasticity of Supply
Degrees of PES
AO2Diagram required
Syllabus Requirement
Theoretical range of PES values: perfectly inelastic (0), inelastic (<1), unitary (=1), elastic (>1), perfectly elastic (∞).
Assessment Objectives
AO2Application and Analysis
Summary
Price elasticity of supply (PES) indicates how much the quantity supplied of a good changes in response to a change in its price. Understanding PES is important for analyzing how supply reacts under different market conditions, which can influence pricing and production decisions.