PES: definition and formula
PES (price elasticity of supply) measures the responsiveness of the quantity supplied of a good to a change in its price:
Because supply curves slope upward, PES is normally positive — price and quantity supplied move the same way. A larger value means supply responds more, so a PES of means a price rise raises quantity supplied by .
Interpreting the PES value
Judged by size: elastic if (quantity supplied changes by a larger % than price), inelastic if (a smaller % than price), unit elastic if (same %). Two extremes: is perfectly inelastic (fixed quantity, a vertical supply curve) and is perfectly elastic (a horizontal curve).
What determines PES
Supply is more elastic when: more time has passed (firms can build capacity), factors of production are mobile (labour and machines switch to this good), firms hold spare capacity, and the good can be stored cheaply. Supply is more inelastic in the short run, for goods with long production periods (crops, minerals), and for goods that cannot be stored.
Drawn from real examiner reports.
Imprecise PES definition (no %)
A common error is to write that PES is "how much supply changes when price changes" without the percentage language. The precise definition is the percentage change in quantity supplied divided by the percentage change in price. Some even define price elasticity of demand by mistake when the question is about supply.
November 2022 Paper 22 (Structured) Q4(a): the report noted definitions lacked precision — candidates wrote about a "small change in supply" rather than percentage changes, and a few defined inelastic demand instead of supply.
Determinant named, direction missing
Naming a factor (time period, spare capacity, ability to store stocks) earns little credit alone. You must state the effect: does the factor make supply more or less elastic, and why? For example: the good can be stored cheaply, so firms release stock quickly when price rises, making supply more elastic.
June 2023 Paper 21 (Structured) Q1(d): candidates named valid influences on the supply of coal (ability to store it, building a new mine) but did not state whether these made supply more or less responsive to price, so they scored poorly.
PES is positive, unlike PED
Unlike PED (price elasticity of demand), which is normally negative because demand curves slope downward, PES is normally positive: the supply curve slopes upward, so a higher price brings a higher quantity supplied. Writing a negative PES without a special reason, or copying the demand sign convention, loses accuracy marks.
General point reinforced across June 2023 Paper 21 and November 2022 Paper 22 elasticity questions, where sign and direction errors recurred in supply-side answers.
Shift of supply vs elasticity
Do not confuse a shift of the supply curve with its elasticity. A shift comes from a change in a condition of supply (costs, technology, taxes, weather). PES is instead the steepness of the curve — how much quantity supplied responds to the price of the good itself, moving along the curve.
Which supply curve is elastic
On a diagram, the flatter supply curve is the more price-elastic one (quantity responds a lot to price) and the steeper curve is the more inelastic one — students often label these the wrong way round. The vertical curve is perfectly inelastic (PES = 0), the horizontal curve perfectly elastic.
Structure the 8-mark discuss (d)
Paper 2 part (d) rewards analysis (AO2) and evaluation (AO3), not lists. Develop chains of reasoning, present both sides — when elastic supply helps and when it does not — then give a judgement, perhaps depending on the time period. Protect time for this 8-mark answer.
Always show PES working
In a calculate question, first find the % change in quantity supplied and the % change in price, then divide (quantity on top). State the value and whether supply is elastic or inelastic. Showing working earns method marks even if the final figure slips.
Match depth to the command word
Paper 2 climbs a ladder: (a) define (2) — a precise sentence, (b) explain (4) — reasons developed, (c) analyse (6) — a cause-and-effect chain, (d) discuss (8) — both sides plus a judgement. Match effort to the command word; do not over-write or under-develop.
PES (price elasticity of supply) measures how responsive the quantity supplied of a good is to a change in its price.
Because supply curves slope upward, a rise in price normally raises the quantity supplied, so PES is usually positive. (Contrast this with PED (price elasticity of demand), which is normally negative.)
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