When the proportionate change in supply is greater than the proportionate change in price. In this case the PES value will be greater than 1.
Below is a diagram to show the characteristics of an elastic supply curve:
The supply curve has the typical upward sloping relationship between price and quantity supplied because of the greater profit incentives that are associated with higher prices. With an elastic supply curve firms have the ability to raise output quite significantly in response to a price rise and this is down to a few factors in the firms production process.
These factors are:
1. Amount of Spare Capacity - The more spare capacity a firm has the greater their ability to raise output in line with prices. This is because they have the resources to do so given that they are producing below full capacity.
2. Length of Production Process - If a firm is producing a good which does not have a long production process they have the ability to respond to price changes by changing supply in line with short term price variations.
3. Factor Substitutability - A firm will always wish to produce the good that has the highest price, as this is the good that will yield the highest level of profit. If firms are able to transfer their factors of production towards different production processes, they have the ability to increase output in line with prices.