PES | A-Level Economics Notes

These revision notes cover everything you need to know about PES for A-Level Economics. They're designed for students studying AQA A-Level Economics, Edexcel A-Level Economics, and Edexcel International A-Level Economics. Written by Jaisul Naik, UCL Economics graduate and A-Level Economics tutor since 2017.

What is the formula for PES?

PES = % change in supply/ % change in price

What is the definition of PES?

PES is the responsiveness of supply to a change in price.

What does it mean if PES = 0?

Supply is perfectly inelastic.

Supply cannot change at all when there is an increase in market price. For example, if price increases by 10%, supply will not change.

What does it mean if PES is 1?

Supply is unit elastic. For example, if price increases by 10%, supply will increase by 10%.

What does it mean if PES is between 0 to 1?

Supply is relatively inelastic. For example, if prices increase by 10%, supply will only increase by 4%.

What does it mean if PES is more than 1?

Supply is relatively elastic. For example, if prices increase by 10%, supply will increase by 24%.

What does it mean if PES is ထ?

Supply is perfectly elastic.

What are the factors that affect PES?

SECTS

Substitutability of factors of production

For example, bakery items are elastic in supply as they can ask their chefs to make different items based on what is in demand. Also, they can use their eggs and flour to make many different items based on demand.