A-LevelEconomicsThe price system and the microeconomy9708/23 · May/June 2020 · Q220 Marks
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]
- (b)Discuss whether, for a manufacturer of smartphones, knowledge of their product's price elasticity of demand or its cross elasticity of demand with respect to other products is more useful.[12]
Mark scheme
Marking points from the official mark scheme (May/June 2020). The mark or mark type is shown in brackets.
- [1] of price elasticity of supply: What it measures
- [1] For accurate formula
- [6] Explanation of the factors determining the difference between the two estimates.
- [4] For an explanation of the possible usefulness of PED (Up to 4 marks)
- [4] For an explanation of the possible usefulness of XED (Up to 4 marks)
- [4] An evaluation of which is likely to be most useful.
- [1] Reserve 1 mark for a conclusion
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