The price of new homes rises and then stays at the higher level. A housebuilder compares how its quantity supplied would respond to this price rise over three months and over three years. Which statement is correct?
Supply is more price elastic over three years because there is time to build more homes
Supply is more price elastic over three months because the higher price raises profit at once
Supply has the same price elasticity over both periods because the price rise is the same
Supply is more price inelastic over three years because new homes are a necessity for buyers
236 exam-style questions on AQA GCSE Economics 1.3 How prices are determined, covering 1.3.1a Demand and the factors that influence it, 1.3.1b The demand curve, 1.3.2a Supply and the factors that influence it, 1.3.2b The supply curve, 1.3.3a Determining equilibrium price, 1.3.3b Applying diagrams and showing revenue, 1.3.4a Complements and substitutes, 1.3.4b Effects of changes on related markets, 1.3.5a Price elasticity of demand, 1.3.5b Factors affecting price elasticity of demand, 1.3.5c Measuring PED and its implications, 1.3.6a Price elasticity of supply, 1.3.6b Factors affecting price elasticity of supply, and 1.3.6c Measuring PES and its implications. Each one has a worked solution and a mark scheme showing where the marks go.