Price elasticity of supply (PES) = % change in quantity supplied ÷ % change in price. PES is positive: a higher price brings more supply.
How strongly can producers react?
Elastic supply
Quantity supplied rises by a bigger % than the price.
Inelastic supply
Quantity supplied rises by a smaller % than the price.
Perfectly inelastic
The amount cannot change at all, like seats in a stadium tonight.
Perfectly elastic
Producers offer any amount at one price, but none below it.
The points to remember
- A straight supply line through the origin: PES = 1.
- One that cuts the quantity axis: inelastic. One that cuts the price axis: elastic.
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Paper 2 asks for a PES calculation almost every year, for 2 marks.
Calculate PES in three steps
% change in quantity supplied
1,000 to 1,100 boxes: 100 ÷ 1,000 × 100 = +10%
% change in price
€4 to €5: 1 ÷ 4 × 100 = +25%
Divide: quantity over price
PES = 10 ÷ 25 = 0.4: inelastic supply
How a 2-mark PES calculation is marked
| You write | Marks |
|---|---|
| Valid working: a correct % change, the formula the right way up | 1 |
| The answer | 1 |
| The answer only, no working | 1 |
| The formula upside down (price over quantity) | 0 |
Show that supply is inelastic: A Show that question wants the same working plus the verdict: "PES is below 1, so supply is inelastic". Only saying "the curve is steep" earns 1 of 2.
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Why does PES matter? It decides whether a rise in demand mostly raises the price or the amount produced.
Our example (made-up numbers)
| Before | After: inelastic supply | After: elastic supply | |
|---|---|---|---|
| Price | €6 | €8.50 | €7 |
| Quantity | 40 | 45 | 60 |
Animated graph
Watch the graph build step by step in study mode.
Remember it as: Inelastic supply: prices jump. Elastic supply: output jumps.
Paper 2 asked this in November 2025, for 4 marks.
Using a demand and supply diagram, explain why an increase in demand for copper causes a greater change in the price of copper when supply is price inelastic than when supply is price elastic.
Model answer plan
See the answer broken into clear points, with guidance on how each point earns marks.
Animated graph
Watch the graph build step by step in study mode.
What the diagram must show
- Axes P and Q; D1 shifting right to D2.
- Two supply curves through P1, Q1, labelled elastic (flatter) and inelastic (steeper).
- The bigger price rise (P1 → P3) on the inelastic curve.
How the 4 marks are given
| Marks | What your answer needs |
|---|---|
| 3–4 | A correct diagram and a correct explanation |
| 1–2 | A correct diagram or a correct explanation, not both |
| 3 at most | A diagram with a wrong or missing label |