A-LevelEconomicsThe Price System and the MicroeconomyOct/Nov 2020Paper 1 Q131 Mark
A firm estimates that the price elasticity of supply of its product is 0.4. Should the firm be concerned by this figure?
ANo, as it implies that the firm will be able to raise revenue by raising price.
BNo, as it suggests there are few substitutes for the product.
CYes, as it means that demand for its product is increasing at a slow rate.
DYes, as it shows that the firm is not able to adjust supply easily when demand changes.
✓ Correct Answer
The correct answer is D. This question tests the candidate's understanding of the price system and the microeconomy within the Economicssyllabus. The examiner's mark scheme requires...
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Common mistake: 62% of candidates selected the distractor because they confused... The examiner specifically designed this question to test whether students can differentiate between... To secure full marks, candidates must demonstrate...
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