CAIE A-Level Economics 2.3.5 PES and Firm Response Speed

CAIE A-Level Economics 2.3.5 PES and Firm Response Speed
Cambridge International AS & A Level Economics 9708 syllabus for exams in 2026, 2027 and 20282026–2028

Practise using PES to judge how quickly firms can change output after market shocks and evaluating capacity, inventories, production lags and policies that improve responsiveness.

How this is tested

  • use the PES coefficient to compare firms' output responses to the same percentage price change
  • explain slow adjustment through production lags, perishability, fixed capacity or scarce skills
  • evaluate stocks, training, infrastructure or subsidies as ways to make supply more responsive

Question 3(b)

[Maximum number: 12]

Assess the extent to which knowledge of a product's price elasticity of supply is the most useful measure of elasticity to a firm needing to react quickly to changes in its market.

Section C

Answer one question.

EITHER