IGCSEEconomicsCambridge (CIE)Exam Questions2. The Allocation of Resources2.8 Price Elasticity of Supply (PES)

Price Elasticity of Supply (PES) (Cambridge (CIE) IGCSE Economics)

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2.8 Price Elasticity of Supply (PES)

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2.8 Price Elasticity of Supply (PES)

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11 mark

The table shows the quantity that producers are willing to supply at different price levels.

price ($)

quantity supplied

120

150

180

20

40

80

If the price increases from $120 to $180, what would be the price elasticity of supply?

  • 0.16

  • 4

  • 6

  • 60

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21 mark

The diagram shows the supply curve for a good. What is the price elasticity of supply when the price rises from $10 to $12?

  • 0.5

  • 0.75

  • 1.4

  • 2.0

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31 mark

Which of the following would likely result in a more elastic supply?

  • Unique and specialised products

  • Easy availability of production inputs

  • Limited production capacity

  • High storage costs

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41 mark

Which of the following factors does not influence the price elasticity of supply?

  • The mobility of the factors of production

  • The availability of substitutes

  • Spare capacity

  • The time period involved

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51 mark

The PES of salt is considered to be relatively elastic in the long term.

Which of the following illustrations would best demonstrate this?

  • 2-7-1-calculation-and-determination-of-ped---relatively-elastic
  • 2-7-1-calculation-and-determination-of-ped--relatively-inelastic
  • 2-8-1-calculation-determination-and-significance-of-pes----relatively-elastic
  • 2-8-1-calculation-determination-and-significance-of-pes---relatively-inelastic

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11 mark

The table shows the effect of a change in the market price from $5 to $6 on the supply of mobile (cell) phones.

price ($)

supply (units)

5

6

10000

15000

Which statement about the price elasticity of supply of mobile phones is correct?

  • Price elasticity of supply is 0.4.

  • Price elasticity of supply is 2.5.

  • Supply is perfectly elastic.

  • There is unit elasticity.

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21 mark

The price elasticity of supply of a good is 2. The price of the good then falls by 10%.

What is the effect on quantity supplied?

  • It falls by 0.2%.

  • It falls by 20%.

  • It increases by 0.2%.

  • It increases by 20%.

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31 mark

Which of the following statements about the price elasticity of supply (PES)? is accurate?

  • PES measures the responsiveness of quantity demanded to a change in price

  • PES is applicable only to luxury goods and not to essential commodities

  • A product with perfectly elastic supply has an infinite PES value

  • PES values are always negative due to the inverse relationship between price and quantity supplied

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41 mark

What is the key characteristic of a product with a perfectly inelastic price elasticity of supply (PES)?

  • Producers can easily adjust production quantities

  • The PES value is equal to 1

  • Consumers are highly responsive to price changes

  • Quantity supplied remains constant regardless of price changes

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51 mark

If the price elasticity of supply (PES) of a product is 0.5, what can be inferred about the supply responsiveness?

  • Supply is highly responsive to price change

  • Supply is inelastic and less responsive to price changes

  • Supply is perfectly elastic

  • Supply is constant regardless of price changes

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11 mark

A technological innovation leads to a significant increase in the production capacity of a product with inelastic supply. How might this impact the stakeholders involved?

  • Producers' revenue will decrease

  • Consumers will benefit from lower prices

  • Producers will reduce their production

  • Consumers' demand will become less elastic

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21 mark

Which of the following products is most likely to have an inelastic supply?

  • Generic office supplies like paper and pens

  • Bottled water during a water shortage

  • Fashion clothing with rapidly changing trends

  • Handcrafted artwork by a renowned artist

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3
Sme Calculator1 mark

A product has a price elasticity of supply (PES) of 0.3. If the price of the product decreases by 8%, by how much will the quantity supplied change?

  • 0.24%

  • 0.8%

  • 2.4%

  • 24%

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4
Sme Calculator1 mark

A product with a price elasticity of supply (PES) of 1.2 experiences a 15% decrease in price. By what percentage will the quantity supplied change?

  • 10%

  • 18%

  • 15%

  • 12%

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51 mark

A product has a price elasticity of supply (PES) of 0.2. How might this impact consumers and producers during a sudden surge in demand?

  • Consumers will face significantly higher prices, and producers will increase output a little

  • Consumers will face minimal price changes, and producers will struggle to increase production

  • Consumers will experience lower prices due to increased production, and producers will gain substantial revenue

  • Consumers will experience higher prices, and producers will lower production to maintain scarcity

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