Question 1

Which factor is the most important in determining the price elasticity of supply?

Accepted Answer

The time period the producer has to adjust inputs and outputs is the most important factor in determining the price elasticity of supply. In the short run, producers may not be able to easily adjust their production levels in response to changes in price. However, in the long run, producers have more time to adjust their inputs and outputs and are therefore more likely to be more responsive to changes in price. The other factors (number of close substitutes, intensity of consumer need, and number of alternative uses) can also impact elasticity, but they are generally less important than the time period a producer has to adjust their production.

Question 2

The price elasticity of supply for a good is 3 if:

Accepted Answer

The answer of The price elasticity of supply for a...

Question 3

According to the text, one study found the price elasticity of supply for child-care workers to be:

Accepted Answer

The text states that "one study found that the price elasticity of supply for child-care workers was about 2." This means that a 1% increase in wages would lead to a 2% increase in the number of child-care workers available. Therefore, the price elasticity of supply for child-care workers is greater than zero, making options A and B incorrect. The text does not suggest that the price elasticity of supply is impossible to estimate, making option D incorrect.

Question 4

If the price elasticity of supply is greater than 1, then:

Accepted Answer

If the price elasticity of supply is greater than 1, it means that a small percentage change in price leads to a larger percentage change in the quantity supplied, indicating that supply is price elastic.

Question 5

The price elasticity of supply for milk in the short run has been estimated to be 0.36, while the price elasticity of supply for milk in the long run is estimated to be 0.51.That means the supply of milk is:

Accepted Answer

The answer of The price elasticity of supply for milk...

Question 6

If the price elasticity of supply is less than 1, then supply is:

Accepted Answer

If the price elasticity of supply is less than 1, it means that a change in price will result in a proportionately smaller change in quantity supplied. This demonstrates that supply is price inelastic.

Question 7

According to the Case in Point on Teen Smoking, the cross price elasticity of smokeless tobacco with respect to the price of cigarettes is about ________ for young males, which means that a tax placed on cigarettes would likely ________ teen smoking and ________ the use of smokeless tobacco by young males.

Accepted Answer

The answer of According to the Case in Point on...

Question 8

If the quantity supplied responds substantially to a relatively small change in price, supply would be:

Accepted Answer

If the quantity supplied responds substantially to a relatively small change in price, it means that the supply is sensitive to changes in price, and the price elasticity of supply is high. In this case, a small change in price can cause a relatively larger change in the quantity supplied, making supply price elastic.

Question 9

The terms elastic and inelastic apply to and are used to describe:

Accepted Answer

The terms elastic and inelastic apply specifically to price elasticity of demand, which measures the responsiveness of quantity demanded to changes in price. Income elasticity of demand and cross price elasticity of demand measure different types of responses (to changes in income and the price of related goods, respectively) and do not use the terms elastic or inelastic.

Question 10

The price elasticity of supply measures:

Accepted Answer

The price elasticity of supply measures the responsiveness of quantity supplied to changes in prices, meaning it measures how much the quantity supplied changes in response to a change in price. It is not related to changes in technology or the prices of inputs. Therefore, choice C is the correct answer.

Question 11

According to the Case in Point on Teen Smoking, the teen price elasticity of demand for cigarettes is about:

Accepted Answer

The teen price elasticity of demand for cigarettes is about -1.0, indicating that a 1% increase in price leads to a 1% decrease in quantity demanded among teens.

Question 12

Assume the supply curve shifts to the right by a given amount at each price.Price in the market will decline the most if demand is more:

Accepted Answer

The answer of Assume the supply curve shifts to the...

Question 13

Suppose that the cross price elasticity of demand for beer with respect to the price of wine is 1.2.This tells us that beer and wine are:

Accepted Answer

A cross price elasticity of demand of 1.2 indicates that if the price of wine increases by 1%, the quantity demanded of beer will increase by 1.2%. This suggests that beer and wine are substitutes, as consumers are willing to switch from one to the other depending on their relative prices. If beer and wine were complements, the cross price elasticity of demand would be negative (i.e. if the price of wine increased, the demand for beer would decrease).

Question 14

A study of the price elasticity of supply for young physicians in the early stages of their careers found it to be about ________ for the group as a whole, but for female physicians in the group it was _________ .

Accepted Answer

The price elasticity of supply for young physicians as a whole was found to be 0.3, indicating a positive elasticity. For female physicians, it was higher, suggesting they are more responsive to changes in wages compared to the group as a whole.

Question 15

There is no total revenue test for price elasticity of supply because:

Accepted Answer

The total revenue test is not applicable for price elasticity of supply because price and quantity supplied are usually directly related (B), and total revenue typically changes in the direction of a supply price change (C), making both statements true.

Question 16

According to the study by Douglas Brown cited in the text, which of the following groups had a negative price elasticity of supply of labor?

Accepted Answer

The answer of According to the study by Douglas Brown...

Question 17

Supply curves tend to be more ________ the greater the time period facing the producer.

Accepted Answer

As time goes on, producers have more leeway to adjust their production processes, find alternative suppliers, and develop new technologies. This tends to make supply curves more elastic, meaning that they are more responsive to changes in price. In other words, a small change in price can lead to a larger change in the quantity supplied. Conversely, in the short run, supply curves may be more inelastic, as producers might not be able to change their output levels as easily.

Question 18

The price elasticity of supply for milk in the short run has been estimated to be 0.36 while the price elasticity of supply for milk in the long run is estimated to be 0.51.That means that:

Accepted Answer

The increase in the price elasticity of supply from 0.36 in the short run to 0.51 in the long run indicates that suppliers are more responsive to price changes over a longer time period, making the supply more price elastic as time increases.

Question 19

Although in most cases the price elasticity of labor supply is ________ , for some individuals it may be ________ .

Accepted Answer

The price elasticity of labor supply is typically positive, meaning that as wages increase, individuals are willing to supply more labor. However, for some individuals, it may be negative, indicating that an increase in wages could lead them to work less, perhaps because they value leisure more at higher income levels.

Question 20

The concept of price elasticity of supply can be applied to labor:

Accepted Answer

Price elasticity of supply measures how responsive the quantity supplied is to changes in price. In the case of labor, this means how responsive the amount of labor supplied is to changes in wages and salaries.

Quiz 5: Macroeconomics: the Big Picture