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IB Economics HL 2.6 Elasticity of Supply Questions

Evaluate price elasticity of supply using determinants, time and capacity to explain producer response and market outcomes.

Syllabus
First assessment 2022
Course
Economics HL
Level
HL

Exam points

  • Define price elasticity of supply and calculate or interpret it as the responsiveness of quantity supplied to a price change.
  • Explain determinants of PES, including spare capacity, stockability, production time and factor mobility, and show their effects on supply-curve shape or slope.
  • Analyse and evaluate PES for primary commodities using diagrams, quantity responses and the time horizon to explain producer or market outcomes.

Covered syllabus points

2.6.1—Price elasticity of supply2.6.2—PES determinants and diagrams2.6.3 (HL)—PES for primary commodities

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Study 2.6 Elasticity of supply conceptsOpen the corresponding Concept lesson for explanations, examples and exam connections.

Question 1

[Maximum number: 2]

Note that widgets and pidgets are imaginary products.

In the country of Burbia, the demand and supply of widgets are given by the functions

Qd=249−4PQs=150+14P\begin{aligned} & Q d=249-4 P \\ & Q s=150+14 P \end{aligned}

where Qd is the quantity demanded per month, Qs is the quantity supplied per month and P is the price per widget in dollars ($).

Question (a)

(a)

The final of the 2018 Football World Cup is expected to be held in the Luzhniki stadium, Moscow. The capacity of the stadium is 80000 . The expected cost of holding the final is US$12\mathrm{US}\$12 million, which is not dependent on the number of people attending the match. All tickets will be sold for the same price.

Figure for Question (a) — IB Economics HL

State the value of the price elasticity of supply (PES) for tickets to the 2018 Football World Cup final.

[ 1 ]

Question (b)

(b)

In the diagram on page 6 draw and label the supply curve for tickets at the 2018 Football World Cup final.

[ 1 ]

Question 2

[Maximum number: 10]

Explain why the price elasticity of supply (PES) for primary commodities is generally lower than the PES for manufactured products.

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