A biotechnology firm producing specialized oncology diagnostic kits operates in a competitive market. Which of the following operational conditions is most likely to cause the firm's price elasticity of supply (PES) to be highly inelastic in the short run?
The diagnostic kits have an exceptionally long shelf-life and can be easily and cheaply stored in the firm's existing warehouses.
The production of the kits relies on a rare, highly specialized enzyme that requires a six-month cultivation process with no viable synthetic substitutes.
The manufacturing plant currently operates at only 55%55\%55% of its total capacity, leaving substantial spare capacity.
The assembly line technicians are highly adaptable and can be rapidly redeployed from other production lines.
256 exam-style questions on AQA A Level Economics 1.3 Price determination in a competitive market, covering 1.3.1 The determinants of the demand for goods and services, 1.3.2 Price, income and cross elasticities of demand, 1.3.3 The determinants of the supply of goods and services, 1.3.4 Price elasticity of supply, 1.3.5 The determination of equilibrium market prices, and 1.3.6 The interrelationship between markets. Each one has a worked solution and a mark scheme showing where the marks go.