Economics 0455 · IGCSE · Price elasticity of supply (PES)
Price elasticity of supply (PES) — practice question
One factor behind very high house prices in cities such as Hong Kong, London, and New York is the low price elasticity of supply of houses. In some of these cities, trade unions are campaigning for housing that is more affordable for workers. Governments are also attempting to introduce a range of microeconomic policy measures to bring house prices down. Furthermore, the stability of the housing market can influence how effective monetary policy is.
(a)[2]
Identify any two monetary policy measures.
(b)[4]
Explain two microeconomic policy measures that a government can use to bring down the price of a product.
(c)[6]
Analyse the main determinants of price elasticity of supply of a product.
(d)[8]
Discuss whether trade unions do, or do not, benefit workers.
Worked solution & mark scheme
This 20-mark question has a full step-by-step worked solution and mark scheme. One marking point: “Alteration in interest rates” …