1. AS Unit F581:
Markets in action
Competitive markets
and how they work
Price elasticity of supply
(PES)

2. Definition and formula
Definition
The responsiveness of quantity
supplied to a change in price
Formula
percentage change in quantity supplied
percentage change in price

3. Terminology
Price elastic supply
Where the percentage change in
quantity supplied is greater than the
percentage change in price
PED is less than 1
Price inelastic supply
Where the percentage change in
quantity supplied is less than the
percentage change in price
PED is between 1 and zero

4. Time period
in
production
process
Marginal
cost
Stock levels
Determinants of PES
Cost of
factor
substitution
Spare
capacity
Ease of
factor
substitution

5. Task 1
In pairs, prepare a
short presentation
on PES using a
blog entry on
Tutor2u
Present your
findings to the
rest of the group
using KeyNote

6. Task 2
In your table groups, talk
through the past paper questions
on PES
How will you show analysis (AO3)
and evaluation (AO4)?
Individually, write up answers
for assessment