OxfordAQA International AS and A-level Economics: Supply and PES (9640) – 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 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 follow the OxfordAQA International AS and A-level Economics (9640) specification, version 1.2, sections 3.1.2.3 (the supply of goods and services) and 3.1.2.4 (price elasticity of supply), with quantitative skills from section 3.5. Section 3.1 is International AS content. Every country, firm and figure is invented and illustrative. Revise first with the study guide and revision notes. Course pages: hub and checklist.

Questions

1. Define a supply curve. [2]

2. In Country C the price of a ceramic mug rises from 16 to 20. Quantity supplied rises from 800 to 860 a week.

(a) Calculate the price elasticity of supply. [3] (b) State what your answer shows about supply. [1]

3. State whether each event causes a movement along, or a shift of, the supply curve for wheat, and give the direction. [4]

• (i) The price of wheat rises.
• (ii) A drought reduces the harvest.
• (iii) The government pays farmers a payment for each tonne grown.
• (iv) Fertiliser becomes cheaper.

4. Price elasticity of supply for a product is 1.8. Its price rises from 20 to 21 and it supplies 3,000 units at the old price. Calculate the new quantity supplied. [3]

5. A market in Country D has the following supply schedule.

Price	4	6	8	10
Quantity supplied	30	60	90	120

(a) Calculate the price elasticity of supply when price rises from 6 to 8. [3] (b) Calculate it when price rises from 8 to 10, and explain why it is lower. [3]

6. Explain two factors that would make the supply of fresh cut flowers price inelastic in the short run. [6]

7. Supply in Country D (question 5) is Qs = 15P − 30. A subsidy of 2 per unit is introduced.

(a) Find the quantity supplied at a price of 8 after the subsidy. [2] (b) State the size and direction of the shift in supply at any given price. [2]

8. Explain why a supply curve slopes upward. [4]

9. After a 20% price rise, the quantity supplied by a market of olive growers changes by 1% immediately, by 9% after one year and by 30% after five years.

(a) Calculate the elasticity for each period. [3] (b) Explain why the values differ. [3]

10. Two firms supply a market. Firm A has Qs = 10P − 20 and firm B has Qs = 6P − 6.

(a) Find market supply at prices of 5 and 7. [2] (b) Calculate the market’s price elasticity of supply between these prices. [3]

11. In Country E, a 10% price rise leads to the following changes in quantity supplied: fresh strawberries +3%; plastic buckets +14%; limited-edition prints +0.5% (for a 5% price rise).

(a) Calculate the price elasticity of supply for each product. [3] (b) Explain one reason why the buckets are more elastic than the strawberries. [3]

12. In Country A, price of tomatoes grown in greenhouses rises by 15%. Quantity supplied rises by 3% in the first season and by 21% after five years. Assess whether supply is likely to be more elastic in the long run than in the short run. [9]

Answers

1. A supply curve shows the relationship between price and the quantity [1] that producers are willing and able to supply, in a given period [1]. [2] Examiner insight: Include both the link between price and quantity and the idea of willingness and ability to supply. Naming only “price and quantity” is thin.

2. (a) Price change = (20 − 16) ÷ 16 × 100 = 25% [1]. Quantity change = (860 − 800) ÷ 800 × 100 = 7.5% [1]. PES = 7.5 ÷ 25 = 0.3 [1]. (b) Supply is inelastic, since PES is below 1 [1]. [4] Examiner insight: Using the old value as the base for each percentage is the standard approach, and showing both percentage changes makes your method clear to the reader.

3. (i) Movement along the curve (an extension of supply) [1]. (ii) Shift left [1]. (iii) Shift right [1]. (iv) Shift right [1]. [4] Examiner insight: Give the direction as well as the type. “Shift” on its own does not show you know the effect.

4. Price change = 1 ÷ 20 × 100 = 5% [1]. Quantity change = 1.8 × 5 = 9% [1]. New quantity = 3,000 × 1.09 = 3,270 [1]. [3] Examiner insight: Rearrange the formula to find the percentage change in quantity before applying it to the original quantity.

5. (a) Price change = 2 ÷ 6 × 100 = 33.3% [1]. Quantity change = 30 ÷ 60 × 100 = 50% [1]. PES = 50 ÷ 33.3 = 1.5 [1]. (b) Price 8 to 10 is +25% and quantity 90 to 120 is +33.3%, so PES = 1.33 [1]. It is lower because the line meets the price axis [1]. Each rise of 2 in price adds the same 30 units, but 30 is a smaller percentage of a larger quantity (33.3% against 50%), while 2 is a smaller percentage of a larger price (25% against 33.3%), so the quantity percentage falls by more and elasticity falls towards 1 [1]. [6] Examiner insight: When asked to explain a change in elasticity along a straight line, refer to percentages. A comment on slope alone does not explain the fall.

6. First factor: perishability or no stocks [1]. Cut flowers wilt, so firms cannot store them to release when the price rises [1]. Therefore quantity supplied cannot rise quickly, and PES is below 1 [1]. Second factor: production period [1]. Flowers take weeks or months to grow, so growers cannot increase output quickly in response to a price rise [1]. Therefore supply is unresponsive over the short run [1]. [6] Examiner insight: Each factor needs a developed link to flowers and to the short run. A list of factors with no application gains little.

7. (a) After the subsidy firms act as if the price were 2 higher: Qs = 15(P + 2) − 30 [1]. At P = 8 this is 15 × 10 − 30 = 120 [1]. (b) Before the subsidy, quantity at 8 was 90 [1]. So supply shifts right by 30 units at every price (15 × 2), equivalent to a downward shift of 2 [1]. [4] Examiner insight: Say whether the shift is right or left and give its size in units. A shift can also be described as vertical, but name which description you are using.

8. A higher price raises profit per unit if costs stay the same [1]. This gives existing firms an incentive to expand output [1] and may attract new firms into the market [1]. Extra output often costs more per unit as capacity is stretched, so a higher price is needed to supply more [1]. [4] Examiner insight: Build a chain from price to profit to incentive to output. A bare statement that “firms want to make more” is not enough.

9. (a) Immediate: 1 ÷ 20 = 0.05 [1]. One year: 9 ÷ 20 = 0.45 [1]. Five years: 30 ÷ 20 = 1.5 [1]. (b) Olive trees take years to plant and mature [1]. In the short run growers cannot add land or trees, so output barely changes [1]. In the long run new groves can be planted and new growers can enter, so supply becomes elastic [1]. [6] Examiner insight: Linking the pattern to time and to the product shows application. Saying “firms have more time” without saying what they can do with it earns less.

10. (a) At 5: 30 + 24 = 54 [1]. At 7: 50 + 36 = 86 [1]. (b) Price change = 2 ÷ 5 × 100 = 40% [1]. Quantity change = 32 ÷ 54 × 100 = 59.3% [1]. PES = 59.3 ÷ 40 = 1.48 [1]. [5] Examiner insight: Add the quantities at each price before calculating a percentage. Adding the two firms’ elasticities is a common wrong route.

11. (a) Strawberries: 3 ÷ 10 = 0.3 [1]. Buckets: 14 ÷ 10 = 1.4 [1]. Prints: 0.5 ÷ 5 = 0.1 [1]. (b) Buckets are made in factories, so firms can run extra shifts and use stocks [1]. Strawberries depend on a growing season and cannot be stored long [1]. This makes strawberry output slow to respond to the price [1]. [6] Examiner insight: The prints have a different price change, so check the percentage for each product. Compare the two products directly to answer the “why” part.

12. Short run: PES = 3 ÷ 15 = 0.2 [1]. Long run: PES = 21 ÷ 15 = 1.4 [1]. Supply is more elastic in the long run [1]. Reasons: greenhouses can be built, extra staff trained, and new growers can enter [1]. In the short run growers have fixed greenhouses and a growing cycle that takes weeks, so output cannot rise quickly [1]. Evaluation: the long-run response is limited if land, water or energy is scarce [1], if barriers to entry such as high set-up costs deter new growers [1], or if growers expect the price rise to be temporary [1]. Judgement: supply is more elastic in the long run, but how much depends on whether inputs and investment are available [1]. [9] Examiner insight: A good answer calculates both values, explains the cause of the difference and then weighs it. Noting that the long-run figure depends on conditions is the evaluative step, and a final judgement should follow.

Where marks are usually lost

• Using the new value as the base for a percentage change.
• Stating a PES figure but not saying whether supply is elastic or inelastic.
• Describing a change in the good’s own price as a shift of the supply curve.
• Shifting the curve the wrong way for a subsidy or a tax.
• Writing about factors without applying them to the product in the question.
• Adding the elasticities of two firms instead of adding their quantities.
• Explaining elasticity with slope instead of percentages.
• Ending an evaluation answer without a clear judgement.

Next steps

• Recall: revision notes
• Explanations: study guide
• Course: OxfordAQA A-level Economics hub and checklist
• Test yourself with all free 10-minute diagnostics
• Book a free trial class: /trial/

Official syllabus

OxfordAQA International AS and A-level Economics (9640), specification version 1.2, sections 3.1.2.3 and 3.1.2.4, with quantitative skills in section 3.5. For International AS exams May/June 2021 onwards and International A-level exams May/June 2022 onwards.