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AS Economics
Starter
If the price of football shirts rises to 49.99 will firms supply more or less of them immediately?
If the demand for cucumbers rises 50% will firms supply more or less of them immediately?
Price elasticity of supply (Pes) measures the relationship between change in quantity supplied and a change in price.
Pes < 1
Pes = 0
Used to explain why prices rise or fall dramatically when there are changes in demand.
P2 P1
The supply of tomatoes is fixed in short run, it is impossible to grow more by next week. If there were a sudden increase in demand, supply would be unresponsive, as supply could not change in the short run.
D1
Qty Demanded
Q1 Q2
P2 P1
The supply of seats was fixed in the short run when at Arsenals old stadium, the capacity was 38,000.
D1
Qty Demanded
Q1 Q2
P1
D
S1
In the long run Arsenal increased capacity to supply by moving to a 60,000 seat stadium.
D1
Qty Demanded
Q1
Q2
Differing Pes
Pes Plenary
Define Pes Give the formula to work out Pes Give two factors which determine Pes How may football tickets Pes be affected in the short run and the long run?