Explain why a severe shortage of vets still exists despite clinics offering significantly higher salaries.
Essay, part (a) [10] · H2 Economics
This model essay is by Mr Eugene Toh, author of the H1 and H2 A Level Economics TYS answer keys, published by SAP and sold at Popular, and of 50 Model Essays (Shing Lee).
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The model thesis in brief
Higher vet salaries should attract more entrants, but the supply of vets is highly price-inelastic because training takes about eight years, so quantity supplied responds slowly. Meanwhile pandemic-driven growth in pet ownership raised the derived demand for vets faster than supply could adjust, so the shortage persists.
Examiner's note: what makes this an A
This 10-mark part rewards a tight demand-and-supply story that hinges on the inelasticity of vet supply. Begin by explaining how an initial mispricing below equilibrium created the shortage, then show why even a wage rise cannot clear it quickly.
Make the PES point central: because qualifying as a vet takes around eight years, the supply of vets is price-inelastic, so the wage rise from Pactual to Pactual2 brings only a small increase in quantity supplied. The shortage narrows but is not eliminated.
The decisive move is the demand shift: pandemic-driven growth in pet ownership raises the derived demand for vets from DD0 to DD1, lifting the equilibrium wage to Pe3 while the actual wage lags at Pactual2, so a severe shortage (Qs2 to Qd3) remains. Consistent notation throughout signals control of the diagram.
Why there was an initial shortage of vets
There was an initial shortage of vets, likely due to incorrect pricing. The equilibrium wage for vets should be at Pe, where DD0 equals SS0. Instead, wages initially may have been at Pactual, where quantity demanded exceeds quantity supplied. This results in a shortage of vets of QdQs.
Why the shortage persists despite significantly higher salaries
This initial shortage would have exerted upward pressure on the wages of vets, pushing wages up from Pactual to Pactual2. As wages rise, the quantity supplied of vets increases as more people are encouraged to join the industry. However, because the supply of vets is price-inelastic, the increase in wages does not produce a large increase in quantity supplied, since the adjustment cannot happen quickly. The higher wage would have reduced the shortage from QsQd to Qs2Qd2.
However, as this process takes a long time owing to the training required for vets, in the meantime the derived demand for vets would have increased due to a rise in the demand for pets during the pandemic. This causes the demand for vets to increase from DD0 to DD1.
The equilibrium wage is now at Pe3, where DD1 equals SS0, while the actual wage remains at Pactual2. At Pactual2, the quantity supplied is Qs2 while the quantity demanded is Qd3. This results in a still severe shortage of Qs2Qd3.
Conclusion
The shortage persists because the price-inelastic, slow-to-train supply of vets cannot respond quickly to higher wages, while the derived demand for vets has risen sharply with pandemic-era pet ownership. Higher salaries narrow the gap but cannot close it within the time frame in which demand has grown.
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If salaries rose, why did the shortage not disappear?
Because the supply of vets is price-inelastic. Qualifying takes about eight years, so higher wages only draw in a small extra quantity supplied in the short run, narrowing but not eliminating the shortage.
What role did the pandemic play?
It raised pet ownership and therefore the derived demand for vets, shifting demand from DD0 to DD1. The equilibrium wage rose to Pe3 while the actual wage lagged, so a severe shortage at the prevailing wage remained.
Are these the official answers?
No. This is a model essay by Mr Eugene Toh, author of the H1 and H2 A Level Economics TYS answer keys published by SAP and sold at Popular. Use it as a guide to structure and rigour, then write it in your own words.
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