Explain the factors that are likely to make the supply of a product relatively price inelastic.

Mark scheme

Marking points from the official mark scheme (Feb/Mar 2017). The mark or mark type is shown in brackets.

1. For knowledge and understanding of the concept of price elasticity of supply (Up to 2 marks)
2. For an accurate formula (Up to 2 marks) (If no formula then allow 1 mark for an understanding of what the concept measures)
3. For some elaboration e.g. distinction between elastic and inelastic (Up to 2 marks) (Total up to 4 marks for knowledge and understanding parts)
4. For application to show the reasons for the inelasticity of supply of a product. For any one factor explained (Up to 3 marks) (So at least 2 factors explained required for full marks for application.)
5. (4 marks maximum for application)
6. The supply of a product might be inelastic because: it has a long production period
7. There are few available to supply from stock
8. There is a shortage of resources required to produce it
9. The time period under consideration is also relevant and can exacerbate the above
10. For analysis of measures that might be taken by businesses to increase the elasticity of supply: For explaining any one way in which businesses might attempt to increase the elasticity of supply and an assessment of the strengths and weaknesses of this approach (Up to 6 marks)
11. (8 marks maximum for analysis)
12. Candidates should consider the causes of inelasticity and suggest ways in which businesses might attempt to counteract each one. For example, they might increase stocks so that supply can be increased form stock when prices rise. Evaluative comment might be that this is expensive and impractical for certain products. Another method is increasing the required resources for example training labour. Again this might prove expensive and be impractical if the economy is at full employment. Since this relates to businesses rather than government subsidies or other government policies are not relevant. Measures that increase the quantity supplied rather than the elasticity of supply of supply should not be credited.
13. For evaluation assessing whether the measures taken are likely to be successful with due reference to the strengths and weaknesses explained in the analysis. (Up to 3 marks)
14. and reaching a conclusion on whether any are likely to be successful (1 mark)