IB Economics HL 2.6 Elasticity of Supply Question Bank

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

Covered syllabus points

2.6.1—Price elasticity of supply 2.6.2—PES determinants and diagrams 2.6.3 (HL)—PES for primary commodities

[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

\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 ($).

(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 $\mathrm{US}\$12$ 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 ]

(b)

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

[ 1 ]

[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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Covered syllabus points

2.6 Elasticity of supply question 1

Question (a)

Question (b)

2.6 Elasticity of supply question 2