Work through the list without notes. If you cannot do a statement, follow its link, then come back. Guide = study guide; Practice = practice questions.
Understanding
- I can define price elasticity of supply and explain why it is positive. (Guide: “What price elasticity of supply measures”)
- I can classify supply as elastic, inelastic or unit elastic from the value of PES, and explain that the label applies to a price range. (Guide: “Elastic, inelastic and unit elastic supply”; Practice Q4)
- I can describe and draw perfectly elastic and perfectly inelastic supply curves, with an example of each. (Guide: Figure 1; Practice Q2)
- I can explain how time, spare capacity, the price and availability of extra or alternative inputs, stocks and production time affect PES. (Guide: “What makes supply more or less elastic”; Practice Q2, Q6)
Calculation and graphing
- I can calculate PES with the midpoint method from a table, showing both percentage changes. (Guide: Worked example 1; Practice Q1, Q4)
- I can calculate PES from given percentage changes, and use a known PES to predict a percentage change in quantity supplied. (Practice Q6)
- I can draw short-run and long-run supply curves through a common point, with the long-run curve flatter. (Guide: Figure 3; Practice Q5)
- I can calculate sellers’ revenue before and after a price change along a supply curve. (Guide: Worked example 2; Practice Q7)
Reasoning
- I can explain why PES can change along a straight-line supply curve even though its slope does not. (Guide: Worked example 1; Practice Q4)
- I can explain why supply is usually more elastic in the long run than in the short run. (Guide: Worked example 2; Practice Q3, Q5)
- I can tell supply-side factors from demand-side factors when explaining an elasticity. (Practice Q3, Q6)
- I can explain why there is no total revenue test for supply. (Guide: FAQ; Practice Q7)
All ticked? Move on to Topic 2.5, Other Elasticities, or return to the course roadmap.