1. What is Price Elasticity of Supply?

Price Elasticity of Supply (PES) measures the responsiveness of quantity supplied to changes in price. It indicates how much the quantity supplied changes when the price changes by 1%.

2. How Does the Calculator Work?

The calculator uses the Price Elasticity of Supply formula:

Where:

• \( PES \) — Price Elasticity of Supply
• \( \%\Delta Q_s \) — Percentage change in quantity supplied
• \( \%\Delta P \) — Percentage change in price

Explanation: The formula calculates the ratio of percentage change in quantity supplied to percentage change in price, showing how sensitive producers are to price changes.

3. Importance of PES Calculation

Details: Understanding PES helps businesses and policymakers predict how supply will respond to price changes, plan production, and make informed pricing decisions.

4. Using the Calculator

Tips: Enter initial and final quantities supplied in units, and initial and final prices in currency units. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What does different PES values indicate?
A: PES > 1 = elastic supply, PES < 1 = inelastic supply, PES = 1 = unitary elastic, PES = 0 = perfectly inelastic, PES = ∞ = perfectly elastic.

Q2: What factors affect PES?
A: Time period, production capacity, availability of inputs, technology, and mobility of factors of production.

Q3: Why is PES usually positive?
A: Because higher prices typically incentivize producers to supply more, creating a positive relationship between price and quantity supplied.

Q4: How does time affect PES?
A: Supply is usually more elastic in the long run as producers have more time to adjust production capacity.

Q5: What is the difference between PES and PED?
A: PES measures supplier responsiveness to price changes, while PED (Price Elasticity of Demand) measures consumer responsiveness to price changes.