Economics 0455 · IGCSE · Price elasticity of supply (PES)
Price elasticity of supply (PES) — practice question
During May 2017, the price of olive oil climbed by more than 10%. This happened because drought affected Greece, Italy, Spain and Tunisia, the main producing nations. Worldwide supply was predicted to drop by 14% in 2017. Demand for olive oil decreased in Europe, but increased in several other countries, including Australia, Brazil and China. In some countries, some staple foods such as bread and rice are taxed, whereas in other countries they are subsidised.
(a)[2]
Identify two forms of land used for growing agricultural crops.
(b)[4]
Explain why the idea of price elasticity of supply (PES) might help a government decide whether to subsidise the production of a product.
(c)[6]
Analyse why demand for a product may be higher in one country than in another country.
(d)[8]
Discuss whether the government should or should not influence the production of basic food items, such as bread or rice.
Worked solution & mark scheme
This 20-mark question has a full step-by-step worked solution and mark scheme. One marking point: “Soil conditions” …