Split the class into pairs and give them to put products on the line in terms of how easy it would be to increase supply if a higher price was offered.
Have them justify their ideas and see if there are any disagreements.
Then get them to work in groups to come up with a list of factors that will make supply either harder or easier to change; they now have the factors affecting PES. Logic:
- Wind turbines: Inelastic as per video
- Clothes: Fairly elastic – stocks can be held, easy to increase volume given spare capacity but might be coming from Asia (therefore SR/LR issues.
- Gold: Inelastic, but there might be stocks.
- Mars bars: Like clothes, but more stocks in the UK
- Bus travel: Inelastic – can’t just run new routes or change timetables. May also take time to acquire new buses.
- Housing: Inelastic – planning (but supply of existing houses – people willing to sell might be elastic).
- Iphones: Like clothes, but at launch operate near capacity therefore might be inelastic.
- Itunes downloads: Infinitely elastic.
- Olives: Pretty inelastic.
- Mona Lisa: Totally inelastic
After this get them to work in pairs to draw what they think the supply curves will look like for:
- Olives
- Music downloads
- The Mona Lisa
- Clothes.
This should then link the idea of PES back to the diagrams.