Syllabus: Cambridge - IGCSE Economics
Module: 2.8 Price Elasticity of Supply (PES)
Lesson: 2.8.3 Determinants of PES

Introduction

This article supports the delivery of Cambridge IGCSE Economics – Section 2.8.3: Determinants of Price Elasticity of Supply (PES), a core component of the international syllabus. The topic equips learners with analytical tools to evaluate how responsive producers are to price changes — a skill with direct implications for commercial decision-making. Understanding the determinants of PES is essential for exploring broader market behaviour and helps students develop economic reasoning applicable to both academic success and future career readiness. The topic also aligns with Enterprise Skills’ commercial awareness framework, designed to meet both curriculum and careers provision goals.

Key Concepts

According to the Cambridge IGCSE Economics syllabus, learners should be able to:

• Define price elasticity of supply (PES) as a measure of the responsiveness of quantity supplied to a change in price.

• Understand and explain the factors influencing PES, including:

  • Time period: The longer the time period, the more elastic supply tends to be.

  • Availability of resources: Easier access to raw materials or labour increases elasticity.

  • Spare capacity: Firms with idle resources can respond quickly, increasing elasticity.

  • Stock levels: Businesses with stockpiles can adjust output faster.

  • Ease of switching production: The more flexible the production process, the more elastic supply can be.

  • Barriers to entry: Fewer restrictions lead to greater elasticity as new firms can enter the market.

These concepts enable learners to move beyond basic definitions and engage with applied economics through diagrams, real-world case studies, and exam-style scenarios.

Real-World Relevance

Understanding PES helps students interpret everyday economic events. For instance:

• Technology manufacturing: Smartphone suppliers may struggle to increase output quickly due to supply chain complexity, making supply inelastic in the short term.

• Agriculture: Farmers’ ability to respond to a price rise is constrained by growing seasons, weather, and biological cycles — a textbook example of inelastic supply in the short run.

• Electric vehicles (EVs): The rapid rise in EV demand has revealed constraints in battery supply and charging infrastructure, limiting supply responsiveness in the short term.

By linking these examples to classroom learning, students begin to grasp how theory informs real-world business and policy decisions — a key pillar of commercial awareness.

How It’s Assessed

The Cambridge IGCSE Economics assessment framework tests understanding of PES and its determinants through multiple formats:

• Multiple-choice questions (Paper 1): Require basic conceptual understanding.

• Structured answers (Paper 2): Frequently include questions like:

  • “Explain two factors that influence PES” (4 marks)

  • “Discuss how PES affects the decisions of a business” (6–8 marks)

• Command words: “Explain”, “Analyse”, “Discuss”, and “Evaluate” are commonly used. Students should be encouraged to:

  • Support points with examples

  • Use diagrams to illustrate relationships

  • Consider short-run vs long-run dynamics

Cambridge examiners reward clarity, applied knowledge, and analytical structure. Practice with real-world data can significantly boost higher-order responses.

Enterprise Skills Integration

This lesson is an ideal opportunity to develop commercial awareness and decision-making competencies, especially when students are asked to evaluate how a business might respond to changing market conditions.

Mapped to Enterprise Skills’ Workplace Readiness Framework, students build:

• Strategic thinking: Evaluating capacity, time, and supply chain flexibility.

• Analytical reasoning: Weighing up supply-side responsiveness in context.

• Problem-solving: Suggesting business strategies when supply is constrained.

Using case study simulations (such as those in Skills Hub Futures), learners can role-play as supply chain managers or production planners, applying elasticity knowledge in simulated workplace settings.

Careers Links

Understanding PES is relevant for numerous career pathways, especially in:

• Supply Chain Management: Monitoring responsiveness to demand shifts.

• Operations and Logistics: Planning production around elasticities.

• Economics and Policy: Advising on industry regulations or market dynamics.

This lesson aligns directly with Gatsby Benchmark 4 (linking curriculum to careers), and can support Benchmark 5 if employer examples or interviews are introduced.

Recommended careers-enhancing tools:

• Skills Hub Futures sessions: Pre-built activities explicitly mapped to career paths

• Employer challenge packs: Real business constraints to consider in student decisions

• Case study debriefs: Explore how firms adapt supply chains in different sectors

Teaching Notes

Common Pitfalls:

• Confusing PES with PED (Price Elasticity of Demand) — diagrams and definitions must be clearly distinguished.

• Ignoring timeframes — students often forget that elasticity may change over time (short vs long run).

• Oversimplification — assuming all goods behave the same without analysing sector-specific constraints.

Teaching Tips:

• Use supply curve shifts with different steepness to visualise elasticity.

• Link directly to sectors students understand (e.g., fast fashion, food delivery).

• Incorporate mini case studies: “How would a clothing retailer respond to a sudden spike in demand?”

Extension Activities:

• Challenge students to calculate PES using real data (where available).

• Run simulations using Enterprise Skills’ digital tools to test supply responsiveness in a competitive scenario.

• Invite a logistics or operations professional (live or recorded) to talk through real-world challenges.

Assessment Practice:

• Use past Cambridge IGCSE questions and model answers.

• Encourage peer marking using mark schemes — focusing on structure and application.