Edexcel IGCSE Economics 1.1.4 Elasticity Question Bank

AO2 3 marks

Award 1 mark for drawing elastic demand curve, labelled

Award 1 mark for showing smaller price change on the axis

Award 1 mark for showing a greater change in the quantity on the axis

(3)

Question
number

With reference to the data above and your knowledge of economics, assess whether supply is likely to be more price elastic for textiles than for agricultural products.

Indicative content

3(e)

AO2 (3 marks)/AO3 (3 marks)/AO4 (3 marks)

AO2 and AO3

- Price elasticity of supply (PES) measures the responsiveness of supply to a change in price

- PES is affected by how quickly and easily supply can change when price changes

- A product has an elastic PES if the percentage change in supply is greater than the percentage change in price. The greater the difference, the more price elastic the supply of the product

- Supply of textiles does not depend on natural factors like the weather whereas it does for agricultural products, meaning it is easier to change supply of textiles in response to a change in price

- Agricultural products, such as fruit, are perishable as well as needing time to grow but textiles can be stored, meaning the supply of agricultural products is less likely to change in response to a change in price compared to the supply of textiles

- Supply of textiles is more price elastic because, unless you are operating at full capacity it is possible to work an extra shift and increase production

A04

- However, if operating at full capacity, it takes time and a range of machinery to produce textiles, making it more difficult to change production to respond to a change in price

- The cost involved when producing textiles means firms may not be able to afford to produce them to store. This may make the supply of textiles less price elastic

- It may depend on the growing conditions in Bangladesh whether the farmers can adjust growing in response to a change in price

- Supply of agricultural products might be more price inelastic in the short run but in the long run producers may be able to adjust techniques to respond to changes in price more quickly

Level

Mark

Descriptor

0

No rewardable material.

Level 1

1-3

- Demonstrates basic knowledge and understanding by developing relevant points. Limited application of economic terms, concepts, theories and calculations (AO2).

- Information presented will lack selectivity and organisation. Interpretation of economic information will be limited, with a lack of analysis of issues (AO3).

- Only offers one viewpoint, meaning there is an unbalanced and incomplete evaluation, showing limited understanding and awareness (AO4).

Level 2

4-6

- Demonstrates partial knowledge and understanding by developing relevant points. Partial application of economic terms, concepts, theories and calculations (AO2).

- Information presented will demonstrate some selectivity and organisation. Interpretation of economic information will be good, with some analysis of issues (AO3).

- Offers more than one viewpoint but the argument may lack balance, leading to an evaluation that may not demonstrate full understanding and awareness (AO4).

Level 3

7-9

- Demonstrates clear knowledge and understanding by developing relevant points. Appropriate application of economic terms, concepts, theories and calculations (AO2).

- Information presented will demonstrate excellent selectivity and organisation. Interpretation of economic information will be excellent, with a thorough analysis of issues (AO3).

- Offers more than one viewpoint. The argument is well balanced and coherent, leading to an evaluation that demonstrates full understanding and awareness (AO4).