2.3 Price elasticity of supply

b) 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. [12]

Semi-conductors are widely used in the production of many types of electronic goods such as smartphones. It has been estimated that the price elasticity of supply for semi-conductors is 0.2 in the short run and 0.8 in the long run.

a) Explain what these estimates mean for producers of smartphones that use semi-conductors and consider the significance of the long-run estimate. [8]

b) Assess whether the supply of agricultural products is likely to be more price elastic or less price elastic than the supply of manufactured products. [12]

b) Assess the extent to which price elasticity of supply or cross elasticity of demand is most useful to businesses. [12]

b) Assess whether the concept of price elasticity of supply or cross elasticity of demand will be more useful to a business wanting to increase its total sales in a growing economy. [12]

a) The price elasticity of supply (PES) for a new smartphone is estimated to be 0.8 in the short run and 1.8 in the long run. Explain what these estimates mean for producers and consumers of smartphones and consider why the estimates differ. [8]

a) Explain two factors that determine the price elasticity of supply of a manufactured product. [8]

a) Use examples to explain why the supply of some products is price elastic and the supply of other products is price inelastic. [8]

b) Discuss whether decisions made by a business are more likely to be influenced by knowledge of the price elasticity of demand for its product or by knowledge of the price elasticity of supply of its product. [12]

b) Discuss whether knowledge of price elasticity of demand or price elasticity of supply is more useful for a car manufacturer. [12]

In summer 2018, many countries suffered a water shortage because of a long spell of very dry weather.

a) Explain whether you would expect the price elasticity of supply of water to be relatively elastic or relatively inelastic. [8]

The price elasticity of supply for a new smartphone is estimated at 0.8 in the short run and 1.5 in the long run.

a) Explain price elasticity of supply and suggest why the above estimates differ. [8]