Question 3(a)
[Maximum number: 8]
Explain what determines elastic and inelastic price elasticity of supply (PES) and consider the extent to which the value of PES may differ between an agricultural good and a manufactured good.
CAIE A-Level Economics 2.3.4 PES Determinants
Practise explaining PES through production time, spare capacity, stocks, storage, factor mobility and labour skills, with contrasts between farm and manufactured goods.
How this is tested
- explain why spare capacity, available stocks and mobile factors make supply more price elastic
- link production lags, perishability, fixed land or scarce skilled labour to inelastic supply
- compare short-run and long-run PES for agricultural and manufactured goods using adjustment time