The price elasticity of supply of perishable goods is_________?

1. Analyze the question The question asks about the price elasticity of supply (PES) of perishable goods, such as fresh tomatoes, fish, bread and fresh milk.

2. Explain the concept PES measures how responsive the quantity supplied is to a change in price:

PES = % change in quantity supplied ÷ % change in price

• Elastic (PES > 1): supply responds strongly to price changes.
• Unitary (PES = 1): supply changes by the same proportion as price.
• Inelastic (PES < 1): supply responds weakly to price changes.
• Perfectly inelastic (PES = 0): supply does not change at all, whatever the price.

The main factor that determines PES is how quickly and easily producers can change output, including whether the product can be stored.

3. Apply it to perishable goods

• Perishable goods spoil quickly, so they cannot be stored for long.
• If the price rises, producers cannot quickly increase supply. Farming takes time, since crops need a growing season.
• If the price falls, producers cannot hold stock back and wait for better prices, because the goods would rot. They are forced to sell, so supply stays roughly the same.

So the quantity supplied changes by a smaller proportion than the price. Supply is inelastic.

4. Why not the other options?

• A (Elastic): this would suit durable, easily stored goods like cement or manufactured items.
• B (Unitary): there is no reason for a proportional response.
• D (Zero): this means perfectly inelastic. It is only an extreme case, such as in the very short run (the market day), and perishable goods are normally described as simply inelastic.

Answer: C. Inelastic

5. Exam tip Remember: "Perish = Can't stock = Inelastic supply." Goods that are easy to store and produce quickly have elastic supply. Goods that spoil or take a long time to produce (such as agricultural products) have inelastic supply.