Economics 2281 · O Level · Price elasticity of supply (PES)
Price elasticity of supply (PES) — practice question
Developments in technology have altered the ways trees (wood) are felled, moved and then turned into furniture, for example tables. Wood has inelastic supply. Wood may be supplied under every economic system. By contrast, public goods are not provided in a market economic system.
(a)[2]
Define what is meant by inelastic supply.
(b)[4]
Explain why public goods would not be supplied in a market economic system.
(c)[6]
Analyse, using a demand and supply diagram, the effect on the market for furniture of an increase in the price of wood.
(d)[8]
Discuss whether or not 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: “Quantity supplied changes by a smaller percentage than price” …