Degrees of PES
Elasticity of Supply
AO2·Diagram required
Syllabus requirement
Theoretical range of PES values: perfectly inelastic (0), inelastic (<1), unitary (=1), elastic (>1), perfectly elastic (∞).
Assessment objectives
AO2 Application and Analysis
Required diagram: Diagrams showing different PES curves: perfectly inelastic (vertical), perfectly elastic (horizontal), and unitary PES (diagonal).
Summary
This topic explains price elasticity of supply (PES), which measures how much quantity supplied responds to a change in price. It describes the numerical formula for PES and the classifications of supply (elastic, inelastic, unitary, perfectly inelastic, perfectly elastic), gives conditions that make supply more or less responsive, and shows the three key diagrams (vertical, horizontal, diagonal) used to illustrate different degrees of PES.
