PDF Notes: Elasticity of supply-2

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    What defines price elasticity of supply?

    It measures how much quantity supplied changes in response to price changes.

    How does relatively inelastic supply behave?

    A small change in price leads to a lesser change in quantity supplied.

    What is an example of perfectly inelastic supply?

    Seats in a sports stadium, fixed regardless of price.

    What happens to supply elasticity over time?

    Supply becomes more elastic and responsive as time increases.

    What distinguishes primary commodities from manufactured goods in terms of PES?

    Primary commodities have longer production times than manufactured goods.

    What is a characteristic of relatively elastic supply?

    A change in price results in a proportionally greater change in quantity supplied.

    What does a perfectly elastic supply curve look like?

    It is horizontal, indicating supply can change without price change.

    What are the determinants of PES represented by the mnemonic 'TRICS'?

    Time, Rate of cost increase, Inventory, Capacity, Substitute factors.

    Why is supply often inelastic in the short run?

    Time lags exist between price increases and quantity supplied adjustments.

    What is an example of price elastic supply?

    Fast-moving consumer goods that are mass produced.