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Determinants of PES questions and answers certified 2024
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Determinants of PES questions and answers certified 2024
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Determinants of PESLength of time - correct answer ✔PES is affected by the amount of time firms
have to adjust their inputs (resources) and the quantity supplied in response
to changes in price. Over a very short time, the firm may be unable to
increase or decrease any of its inputs to change the quantity it produces. This
is inelastic supply.
Mobility of factors of production - correct answer ✔The ease and speed at
which firms can shift resource and production between different products. The
more easily and quickly resources can be shifted out of one line of production
and into another (where price is increasing), the greater the responsiveness of
quantity supplied to changes in price.
Spare (unused capacity of firms) - correct answer ✔Sometimes firms may
have capacity to produce that is not not being used (for example, factories or
equipment may be idle for some hours each day). If this occurs, it is relatively
easy for a firm to respond with increased output to price rise. The greater the
spare capacity, the more elastic the supply.
Ability to store stocks - correct answer ✔Some firms store stocks of output
they produce but do not sell right away. Firms that have an ability to store
stocks will be able to respond quickly to an increase in price.
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