Be able to calculate price elasticity of supply
Price elasticity of supply (PES) measures how much the quantity supplied changes when the price of a good changes. You calculate it by dividing the percentage change in quantity supplied by the percentage change in price.
Formula
PES = (% ΔQs) ÷ (% ΔP)
Real World
If oil producers increase output from 10m to 11m barrels per day following a 25% price rise, PES = (10% ÷ 25%) = 0.4 — inelastic, reflecting the long lead times in drilling new wells.
Exam Focus
Show your working step by step; examiners award method marks even if the final value is wrong.
Price Elasticity of Demand
PED = % change in quantity demanded ÷ % change in price
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