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Supply · Paper 1 — Free Economics SL Practice Questions
1FoundationSAQ-SLaw of supply and its determinants6 marksPaper 1~9 min
A farmer in Kenya grows maize for the local market. In 2023, the price of maize increased from KES 50 per kilogram to KES 70 per kilogram. The farmer responded by increasing the quantity supplied from per month to per month.
(a)
Define the law of supply. [1 mark]
(b)
Calculate the price elasticity of supply (PES) for the farmer's maize using the data above. [2 marks]
(c)
Using your answer to (b), explain whether the farmer's supply is elastic or inelastic, and suggest one reason why this might be the case. [3 marks]
Solutions
2MasterySAQ-SLaw of supply and its determinants6 marksPaper 1~9 min
The global market for lithium, a key input in electric vehicle (EV) batteries, has experienced significant changes. In 2023, the price of lithium carbonate fell by over 70 percent from its 2022 peak, while the number of lithium mines in operation globally increased by 15 percent. Tesla, a major EV producer, announced plans to build its own lithium refinery in Texas to secure supply.
(a)
State the determinant of supply affected by the increase in the number of lithium mines operating globally. [1 mark]
(b)
Using a fully labelled supply for the global lithium market, explain the impact of the increase in the number of lithium mines on the supply curve. [3 marks]
(c)
Using the concept of a determinant of supply, explain one reason why Tesla's decision to build its own lithium refinery may reduce its production costs for electric vehicles. [2 marks]
Solutions
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