Page 97 - F1 - AB Integrated Workbook STUDENT 2018-19

External analysis – economic factors

4.4 Price elasticity of supply

% change in demand
Price elasticity of supply =
% change in price

 Always positive

 >1 is 'elastic'

 <1 is 'inelastic'.

4.5 Factors affecting elasticity of supply

 Time frames More inelastic in the short term

 Factors of production Availability of factors e.g. trained labour  more elastic

 Inventory levels Higher inventory  more elastic

 Competition More firms  more elastic

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