(a)[8]
Explain what determines elastic and inelastic price elasticity of supply (PES) and assess how far the PES value may differ between an agricultural good and a manufactured good.
(b)[12]
Firms often estimate elasticity values so they can judge how successful price changes or new product launches might be. Assess the extent to which an understanding of income elasticity of demand (YED) may be more useful than cross elasticity of demand (XED) in increasing the income from sales for a firm.