Economics 0455 · IGCSE · Price elasticity of supply (PES)
Price elasticity of supply (PES) — practice question
Technological progress has altered the ways trees (wood) are felled, moved and used in making furniture, such as tables. Wood is in inelastic supply. Wood may be supplied under every economic system. However, public goods are not supplied in a market economic system.
(a)[2]
Define the term inelastic supply.
(b)[4]
Explain why a market economic system would not supply public goods.
(c)[6]
Analyse, with the aid of a demand and supply diagram, the effect on the furniture market of a rise in the price of wood.
(d)[8]
Discuss the extent to which advances in technology will benefit a country’s population.
Worked solution & mark scheme
This 20-mark question has a full step-by-step worked solution and mark scheme. One marking point: “The percentage change in quantity supplied is smaller than the percentage change in price” …