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Economics IGCSEPDF 36
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Similar to PED, PES too can be categorized into price elastic supply, price inelastic supply,
perfectly price inelastic supply, infinitely price elastic supply and unitary price elastic supply.
The price elasticity of supply (PES) is measured by % change in Q.S divided by % change in
price.
• If the price of a cappuccino increases by 10%, and the supply increases by 20%. We say the
PES is 2.0.
• If the price of bananas falls 12% and the quantity supplied falls 2%. We say the PES = 2/12 =
0.16
• may be constantly changing (1) There are likely to be a number of competitors in the
industry/the produce might be considered to be a luxury (1) and, therefore, the PED is likely to be
elastic (1) unless the manufacturer can build up a strong sense of brand loyalty (1) in which case
the PED will be less elastic (1). Answers which fail to refer to the television manufacturing
industry can gain no more than 4 marks. A maximum of 5 marks for a one-sided approach. Note:
maximum of 6 marks. [6]
Price Elasticity of Supply (PES)
The PES of a product refers to the responsiveness of its quantity supplied it to changes in
its price.
PES of a product= %change in quantity supplied / %change in price