Download PES-Introduction

Price Elasticity of Supply – practice exercises
1. In each of the following cases, calculate the price elasticity of supply to 2 decimal places;
decide whether this makes the supply of this product elastic or inelastic:
a. The price of a product falls from 60p to 40p, causing supply to contract from 120 to 100
b. The product’s price is reduced from £45 to £40. As a result, supply falls from 6000 to
5000
c. The price of a product rises from £50 to £60, causing supply to extend from 100 to 200
d. A product’s price rises from £12 to £15 but supply remains unchanged at 2000
e. Supply extends from 900 to 1200 because of a rise in price from £10 to £11
2. Decide for each of these products whether supply is likely to be elastic or inelastic; list
reasons for your decision:
a) Pork
b) Paper clips
c) Fresh strawberries
d) Neck ties
e) Tinned pears
f)
Aeroplanes