2.3 Price elasticity of supply

In this chapter you will learn how to:

• define the meaning of price elasticity of supply (PES)
• calculate price elasticity of supply using the formula
• explain the significance of the relative percentage changes, the size and sign of the coefficient of price elasticity of supply
• analyse the factors affecting price elasticity of supply
• discuss how price elasticity of supply is related to the speed and ease with which businesses react to changed market conditions.