Price Elasticity of Supply (PES)

Factors affecting PES (price elasticity of supply)

• Length of production — the longer it takes to make a good, the harder it is to increase output quickly → supply is usually more inelastic in the short run.
• Ease of storage — if output can be stored (e.g. grain in silos), producers can release stock when price rises → supply is more elastic.
• Time period — over a longer time, firms can hire workers, buy capital and expand capacity → supply becomes more elastic than in the short run.
• Complexity of production — goods needing specialist skills, long supply chains or rare inputs are harder to scale up → more inelastic supply.
• Spare capacity — if firms have unused machines or idle workers, they can raise output quickly when price rises → more elastic supply.
• Scarcity of resources — when key inputs (land, raw materials, skilled labour) are limited, firms struggle to expand output → supply is more inelastic.