Price elasticity of Supply
PES: A measure used to show the responsiveness, or elasticity, of the quantity supplied of a good
or service to a change in its price. The PES is always a positive number
PED = % change in Quantity Supplied PED = (New QS – Old QS) x100
% change in Price , (New P – Old P) x 100
Inelastic : The PED value is between 0 and 1. It tends to have few substitutes and takes time to alter the
quantity of production.
Elastic : The PED value is between 1 and ∞.
Note: The amount supplied is not always equal to supply and may create shortages and surplus.