PES depends on one question: how easily can producers make more? Five things decide it.
What makes supply elastic
More time
Over time firms can build, hire and train.
Spare capacity
Idle machines and staff can start work at once.
Goods that can be stored
Stocks can be sold as soon as the price rises.
Mobile factors of production
Workers and machines can switch over from other products.
Costs that rise quickly
Each extra unit costs much more to make, so firms add little.
Remember it as: Time, spare capacity, stocks, mobile factors: each makes supply more elastic.
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Time is the most important determinant. Watch the same price rise in three time periods.
Our example (made-up numbers)
| Time period | Price | Quantity supplied | PES |
|---|---|---|---|
| Right now (momentary) | €6 → €8 | 40 → 40 | 0 |
| Short run | €6 → €8 | 40 → 45 | 0.4 |
| Long run | €6 → €8 | 40 → 70 | 2.3 |
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Higher Level asks why PES is lower for primary commodities than for manufactured products. Every determinant points the same way.
Why the two differ
| Determinant | Primary commodities (coffee, copper) | Manufactured products (phones) |
|---|---|---|
| Time | Years to plant or open a mine | Weeks to add a shift |
| Spare capacity | Land and mines fully used | Idle machines common |
| Stocks | Fresh produce spoils | Easy to store |
| Mobile factors | Farmland stays farmland | Machines and staff switch products |
| PES | Low | Higher |
Quick reminder
- Curves: D1, D2, S (short run) and S (long run)
- Marks: P1, P2, P3 and Q1, Q2, Q3
- Dots with dashed lines to the axes, an arrow for the shift
- No numbers, no title
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Paper 1 asked this in May 2025, as part (a) for 10 marks.
Explain why the price elasticity of supply (PES) for primary commodities is generally lower than the PES for manufactured products.
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How the 10 marks are given
| Marks | What your answer needs |
|---|---|
| 9–10 | Theory fully explained, terms used correctly all the way through, the diagram included and fully explained |
| 7–8 | Theory explained, terms mostly right, the diagram included and explained |
| 5–6 | Theory partly explained, some terms, the diagram included |
| 1–4 | Theory only described or stated; few relevant terms |