Which of the following scenarios is most likely to result in a highly price-elastic supply (PES>1PES > 1PES>1) for a manufacturer of specialised medical devices?
The market demand for the medical devices is highly price-inelastic due to a lack of therapeutic alternatives.
The key raw material is a rare-earth metal sourced from a single mine subject to strict export quotas.
The firm operates with significant spare capacity and holds substantial buffer stocks of standardised component parts.
The manufacturing process requires highly specialised, custom-built robotics that take up to 18 months to commission and calibrate.
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.