Cambridge O Level Economics: Price elasticity of supply: calculation, determinants and significance (2281) – Practice Questions

These are original questions written for Marlbridge, for revision and practice on this content. They are not reproduced past-paper questions, and they do not replicate the exam’s exact structure, question count or mark tariffs – examination boards hold copyright in their own papers. Use these alongside the official past papers from your board or school.

These questions cover section 2.8 (2.8.1 to 2.8.4, price elasticity of supply, PES) of the Cambridge O Level Economics (2281) syllabus for examination in 2026, version 2. There are no tiers. Every firm, market, country and figure is invented and illustrative. Revise first with the study guide and the revision notes. Other links: the Cambridge O Level Economics hub, the printable checklist and the free diagnostics. Write out your own answer before you read the worked answer.

Questions

1. Define price elasticity of supply. [2]

2. A pottery workshop in Country A (illustrative) raises output from 160 to 184 plates a week when the price per plate rises from 25 to 30. Calculate the price elasticity of supply and state whether supply is elastic or inelastic. [4]

3. The price of a handmade scarf falls from 50 to 45. A market stall (illustrative) cuts the quantity it supplies from 400 to 348 scarves. Calculate PES and describe the supply. [3]

4. The PES of a good is 0.8. Price rises by 15% and the quantity supplied is currently 2,500 units. Calculate the new quantity supplied. [3]

5. Use supply curve diagrams in this question.

(a) A straight-line supply curve starts at the origin. When price rises from 10 to 12, quantity supplied rises from 30 to 36. Calculate PES and state what it tells you about every point on the curve. [3] (b) A second straight-line supply curve is Q = 30 + 2P. Calculate its PES when price rises from 10 to 12. [3] (c) Describe the position of a supply curve with a PES of zero. [1]

6. Fresh strawberries (illustrative market) have inelastic supply in the short run. Explain two reasons for this. [4]

7. The table shows a price rise and the change in output for three goods in Country B (illustrative).

Good	Price before	Price after	Output before	Output after
A	12	15	600	630
B	40	44	200	260
C	5	6	1,000	1,000

(a) Calculate PES for each good. [3] (b) State which good has the most elastic supply. [1] (c) Suggest one reason why the supply of good B is elastic and one reason why the supply of good C could be perfectly inelastic. [2]

8. A furniture maker (illustrative) sells chairs at 30. The price rises to 33. Output rises from 240 to 252 chairs a month in the short run. After two years, output is 324 a month at the new price.

(a) Calculate PES in the short run. [2] (b) Calculate PES in the long run. [2] (c) Explain why supply is more elastic in the long run. [2]

9. Demand for a product rises in two markets (illustrative). In Market P, price rises from 20 to 23 and output from 200 to 206. In Market R, price rises from 20 to 21 and output from 200 to 230.

(a) Calculate PES in each market. [4] (b) Explain which market’s consumers are better off after the rise in demand. [2]

10. A government in Country C (illustrative) wants the output of a locally grown vegetable to increase by 9%. The PES is 0.3 and the price is 60.

(a) Calculate the percentage rise in price needed. [2] (b) Calculate the new price. [1] (c) Explain one reason why raising output by a price rise alone could be slow. [2]

11. In Town T (illustrative), the average price of a new flat rises from 80 to 88. In the first year, completed flats rise from 1,200 to 1,230. After four years, completed flats are 1,560. Evaluate whether the government should rely on higher prices to increase the supply of flats. [8]

Answers

1. PES measures the responsiveness [1] of quantity supplied to a change in a good’s price [1]. [2] Examiner insight: A definition has to link “quantity supplied” with a price change. Saying “how much firms supply” describes supply itself and leaves out the idea of responsiveness.

2. % change in price = (30 - 25) / 25 x 100 = 20% [1]. % change in quantity = (184 - 160) / 160 x 100 = 15% [1]. PES = 15 / 20 = 0.75 [1]. This is below 1, so supply is inelastic [1]. [4] Examiner insight: Lay out the two percentage changes before dividing, since a bare final figure leaves your method unseen. The word “inelastic” should follow from the value you found.

3. % change in price = (45 - 50) / 50 x 100 = -10% [1]. % change in quantity = (348 - 400) / 400 x 100 = -13% [1]. PES = -13 / -10 = 1.3, so supply is elastic [1]. [3] Examiner insight: When price falls, both percentages are negative and the signs cancel. A negative PES is a sign of a slip in one of the signs.

4. % change in quantity = 0.8 x 15 = 12% [1]. New quantity = 2,500 x 1.12 [1] = 2,800 units [1]. [3] Examiner insight: Working backwards means rearranging the formula. Many errors come from adding 12 units instead of 12 per cent of the current quantity.

5. (a) % change in price = (12 - 10) / 10 x 100 = 20% and % change in quantity = (36 - 30) / 30 x 100 = 20% [1]. PES = 20 / 20 = 1 [1]. PES is 1 (unitary) at all points of a straight supply curve that starts at the origin [1]. [3] (b) Quantity at price 10 = 30 + 20 = 50 and at price 12 = 30 + 24 = 54 [1]. % change in quantity = 4 / 50 x 100 = 8% and % change in price = 20% [1]. PES = 8 / 20 = 0.4 [1]. [3] (c) A vertical straight line [1]. [1] Examiner insight: Describing a curve is rewarded for naming its position or shape, such as vertical or from the origin, not for saying “steep”. For (b), checking where the line meets the axis supports your result: it meets the quantity axis, so PES is below 1.

6. Strawberries are perishable and cannot be stored [1], so firms cannot release stock when the price rises [1]. They also take time to grow [1], so firms cannot raise output within the season even when the price is high [1]. [4] Examiner insight: For a question that asks you to explain, name the determinant and then say why output cannot rise quickly. A bare list such as “stocks” and “time” explains nothing.

7. (a) Good A: price +25%, output +5%, PES = 5 / 25 = 0.2 [1]. Good B: price +10%, output +30%, PES = 30 / 10 = 3.0 [1]. Good C: price +20%, output 0%, PES = 0 [1]. [3] (b) Good B [1]. [1] (c) B: the firm may have spare capacity or stocks, so it can raise output quickly [1]. C: output may be fixed for the period, for example a harvest already collected, so it cannot rise at all [1]. [2] Examiner insight: Compare PES values, not price or output changes. In (c), a reason works best if it matches the data, such as unchanged output for good C.

8. (a) Price +10% [1]. Output (252 - 240) / 240 x 100 = 5%, so PES = 5 / 10 = 0.5 [1]. [2] (b) Output (324 - 240) / 240 x 100 = 35%, so PES = 35 / 10 = 3.5 [1] [1]. [2] (c) Over two years the firm can build or buy new machines and hire and train more workers [1], and new firms can enter the market, so output can rise by much more [1]. [2] Examiner insight: Keep the original value of 240 as the base for both calculations. Compare the two time periods in words: the same price rise has a larger effect over a longer time.

9. (a) Market P: price +15%, output +3%, PES = 3 / 15 = 0.2 [1] [1]. Market R: price +5%, output +15%, PES = 15 / 5 = 3.0 [1] [1]. [4] (b) Consumers in Market R are better off [1]. Supply is elastic, so the price rises only 5% and output rises 15%, while in P the price rises 15% for only 3% more output [1]. [2] Examiner insight: Reach a decision and support it with figures from the data. A statement like “R is better” with no price or output comparison leaves the reasoning unfinished.

10. (a) Price rise needed = % change in quantity / PES = 9 / 0.3 [1] = 30% [1]. [2] (b) 60 x 1.30 = 78 [1]. [1] (c) Supply is inelastic, so firms cannot raise output quickly [1]; for example crops take a season to grow, so output rises only slowly even after the price has risen [1]. [2] Examiner insight: In (c) tie the reason to PES: because supply is inelastic, output responds little to price. Mentioning the government’s aim without explaining why output is slow does not answer “why”.

11. First year: price +10%, output +2.5%, PES = 2.5 / 10 = 0.25 [1]. After four years: output +30%, PES = 30 / 10 = 3.0 [1]. Supply is inelastic in the short run and elastic in the long run [1]. Analysis: a higher price rewards builders, but in the first year they have little spare capacity, land or trained labour, so output rises slowly [1]. Over four years more land can be developed, workers trained and new builders can enter [1]. The price rise therefore does raise supply, but with a long delay [1]. Evaluation: relying on price alone makes buyers pay more for years while supply catches up, which may harm low-income families [1]. The government could add measures such as releasing land or funding training, which speed up the response [1]. The best judgement depends on how urgent the shortage is and the time period considered. [8] Examiner insight: A strong answer uses the two PES values as evidence, distinguishes short and long run, and ends with a judgement. Describing the numbers without a decision usually leaves the evaluation incomplete.

Where marks are usually lost

• Putting the percentage change in price on top of the formula.
• Using the new value as the base of a percentage change.
• Forgetting to state “elastic”, “inelastic” or “unitary” after the number.
• Dropping the negative signs on a price fall and quoting a negative PES.
• Treating a steep curve as elastic, or ignoring where a straight line meets the axes.
• Giving determinants as a list without saying why output can or cannot rise.
• Writing about substitutes or necessities, which are PED determinants.
• Discussing significance in general terms without naming consumers, producers or government.
• Leaving the time period out of a short run and long run comparison.
• Stating a conclusion in an evaluation with no figures from the data to support it.

Next steps

• Return to the revision notes and the study guide.
• Check your coverage on the printable checklist and the Cambridge O Level Economics hub.
• Try a free 10-minute diagnostic to find weak spots.
• Book a free trial class.

Official syllabus

Cambridge O Level Economics (2281) syllabus for examination in 2026, version 2, published by Cambridge University Press & Assessment: section 2.8 Price elasticity of supply (PES).