PES Diagrams (Relatively Elastic and Inelastic Supply)
Elasticity of Supply
AO4·Diagram required
Syllabus requirement
Understanding how elasticity affects the steepness or flatness of supply curves.
Assessment objectives
AO4 Use of Appropriate Skills
Required diagram: Diagrams comparing relatively elastic and inelastic supply curves based on steepness of the slope.
Summary
This topic explains how price elasticity of supply (PES) measures the responsiveness of the quantity supplied to changes in price and shows diagrammatic differences between relatively elastic and relatively inelastic supply curves. It covers the special cases PES > 1, PES < 1, PES = 1, PES = 0 and PES = ∞, explains why spare capacity and production time affect PES, and gives real-world examples where supply is effectively fixed.
