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Price elasticity of supply
(section)
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{{Short description|Measure in economics}} [[File:Price elasticity of supply.PNG|thumb|Price elasticity of supply using the [[Arc elasticity|midpoint method]].]] {{Distinguish|Price elasticity of demand}} {{missing information|history, and effects|date=November 2017}} The '''price elasticity of supply''' ('''PES''' or '''E<sub>s</sub>''') is commonly known as βa measure used in [[economics]] to show the responsiveness, or [[Elasticity of a function|elasticity]], of the quantity supplied of a good or service to a change in its price.β Price elasticity of supply, in application, is the percentage change of the quantity supplied resulting from a 1% change in price. Alternatively, PES is the percentage change in the quantity supplied divided by the percentage change in price. When PES is less than one, the supply of the good can be described as ''inelastic.'' When price elasticity of supply is greater than one, the supply can be described as ''elastic''.<ref name="png">Png, Ivan (1999). pp. 129β32.</ref> An elasticity of zero indicates that quantity supplied does not respond to a price change: the good is "fixed" in supply. Such goods often have no labor component or are not produced, limiting the [[Long run and short run#Short run|short run]] prospects of expansion. If the elasticity is exactly one, the good is said to be ''unit-elastic''. Differing from [[price elasticity of demand]], price elasticities of supply are generally positive numbers because an increase in the price of a good motivates producers to produce more, as relative [[marginal revenue]] increases.<ref>{{Cite book |last=Nechyba |first=Thomas J. |title=Microeconomics: An Intuitive Approach with Calculus (2nd Edition) |publisher=CENGAGE Learning |year=2017 |isbn=9781305650466 |edition=2nd |location=Boston, MA |pages=634β641 |language=English}}</ref> The quantity of goods supplied can, in the short term, be different from the amount produced, as manufacturers will have stocks which they can build up or run down.
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