OCR A Level Economics

Price elasticity of supply

AS/Year 1 Microeconomics tutorial

© Hodder & Stoughton Limited 2015

Price elasticity of supply (PES)

OCR A Level Economics

● PES measures the responsiveness of quantity supplied to
a change in price

● Formula:

percentage change in quantity supplied

percentage change in price

AS/Year 1 Microeconomics © Hodder & Stoughton

Limited 2015 2
Elastic or inelastic?

OCR A Level Economics

Elastic supply
● If the firm is able to increase supply quickly in response to a
change in price, then supply is said to be price elastic in
supply

Inelastic supply
● If the firm is unable to increase supply quickly in response to
a change in price, then supply is said to be price inelastic in
supply

AS/Year 1 Microeconomics © Hodder & Stoughton

Limited 2015 3
Factors determining PES

OCR A Level Economics

● Time

● Weather conditions

● Ease of access to specialist equipment

● Planning permission and other government restrictions

● Stocks

● Spare capacity
AS/Year 1 Microeconomics © Hodder & Stoughton
Limited 2015 4
Short and long-run supply

OCR A Level Economics

AS/Year 1 Microeconomics © Hodder & Stoughton
Limited 2015 5