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Economics IGCSEPDF 39
118 pagesrevision 46932
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supply. If there are not enough resources, producers will find it difficult to adjust to the price
changes, and supply will become price inelastic.
PAST-PAPER QUESTIONs
Q.The costs of production in the motorcycle industry have risen significantly in recent years.
(a) Explain the concept of price elasticity of supply. [4]
(b) Discuss to what extent time is the main influence on the price elasticity of supply. [6]
Mark Scheme
(a) Up to 2 marks for definition:
• the responsiveness of supply to a change in price/the percentage change in quantity supplied
of a product divided by the percentage change in price (2)
• how price affects supply/change in supply divided by change in price (1)
Up to 2 marks for further development:
elastic supply has value greater than 1(1) inelastic supply has a value less than 1 (1) PES
varies from perfectly elastic to perfectly inelastic (1) PES varies along the length of the supply
curve (1)
always positive (1)
(b)Up to 4 marks for why it might be the main influence:
• at a particular moment in time, it may be very difficult (or impossible) to increase supply (1)
supply may be relatively inelastic (1)
• the longer the period of time, the more responsive supply is likely to be to a price change (1)
relatively elastic (1)
Up to 4 marks for discussion of other possible influences:
• the ease with which a product can be stored (1) the easier it is to store the product, the more
elastic the supply will be (1)
• the availability of factors of production (1), e.g. supply may be inelastic in periods of full
employment (1)