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Edexcel A-Level Economics AS 2.3.3 2a Factors Influencing Sras Changes in Sras Costs of Raw Materials and Energy Questions

Practise applying SRAS shifts to real contexts where raw material, energy, exchange-rate or tax changes alter firms' production costs.

Syllabus
First assessment 2019
Course
Economics YEC11
Level
AS

Exam points

  • classify energy, raw-material, exchange-rate and indirect-tax changes by their effect on firms' costs and SRAS
  • draw leftward or rightward SRAS shifts and show the resulting price-level and real-output equilibrium
  • trace currency depreciation or higher import prices through production costs to lower SRAS and real GDP
  • evaluate cost shocks using importer or exporter status, reliance, duration, spare capacity and possible AD changes

Edexcel A-Level Economics AS 2.3.3 2a Factors Influencing Sras Changes in Sras Costs of Raw Materials and Energy Questions question 1

[Maximum number: 4]

Between January 2014 and September 2020 the price of natural gas fell from $ 5.60 per cubic foot to $ 1.66 per cubic foot. Natural gas is an important source of energy for Japanese producers.

Draw a SRAS and AD diagram to show the effect of the decrease in the price of natural gas on the price level and real output for Japan.

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