Question 1

If the quantity supplied and the price change by the same percentage,then supply is
A)elastic.
B)inelastic.
C)unit elastic.
D)perfectly elastic.
E)perfectly inelastic.

Accepted Answer

When the quantity supplied and the price change by the same percentage, the elasticity of supply is unit elastic. This means that the percentage change in quantity supplied is exactly the same as the percentage change in price. For example, if the price of a good increases by 20%, and as a result, the quantity supplied also increases by 20%, then the supply is unit elastic.

Question 2

If the price elasticity of supply for a good is 10,then supply is
A)elastic.
B)inelastic.
C)unit elastic.
D)perfectly elastic.
E)perfectly inelastic.

Accepted Answer

A price elasticity of supply of 10 means that a 1% increase in price leads to a 10% increase in quantity supplied. This indicates a very high level of responsiveness, which characterizes elastic supply.

Question 3

The price elasticity of supply is a measure of the extent to which the quantity supplied of a good changes when the
A)cost of producing the product increases.
B)quantity of the good demanded increases.
C)supply increases.
D)price changes.
E)number of firms supplying the good changes.

Accepted Answer

Price elasticity of supply measures the responsiveness of quantity supplied to a change in price. Therefore, when the price changes, the quantity supplied changes as well, making D the correct choice.

Question 4

The supply of beach front property on St.Simon's Island is
A)elastic.
B)unit elastic.
C)negative.
D)inelastic.
E)perfectly elastic.

Accepted Answer

The supply of beach front property on St.Simon's Island is likely to be inelastic because it is a limited resource and cannot be easily increased or decreased in the short run. Additionally, the demand for beach front property is likely to be high, which further limits the ability of suppliers to respond to changes in price. Therefore, even if the price of beach front property were to increase, the quantity supplied may not increase significantly in the short run.

Question 5

For a product with a rapidly increasing opportunity cost of producing additional units,
A)demand is price elastic.
B)supply is price elastic.
C)demand is price inelastic.
D)supply is price inelastic.
E)the demand curve is vertical.

Accepted Answer

A rapidly increasing opportunity cost of producing additional units indicates that the resources required to produce each additional unit become more and more scarce, leading to a limited supply. In such a case, the supply curve is price inelastic as even a significant increase in price would not result in a substantial increase in quantity supplied due to limited availability of resources.

Question 6

When the percentage change in the quantity supplied is twice the percentage change in price,then supply is
A)elastic.
B)inelastic.
C)unit elastic.
D)perfectly inelastic.
E)perfectly elastic.

Accepted Answer

When the percentage change in the quantity supplied is twice the percentage change in price, the elasticity of supply is greater than 1, which means it is elastic. Elastic supply is when a small change in price leads to a larger change in the quantity supplied.

Question 7

When the price of a textbook is $95,the quantity of textbooks supplied is 90 million a year and when the price rises to $105,the quantity of textbooks supplied is 110 million a year.The supply of textbooks is
A)elastic.
B)perfectly elastic.
C)inelastic.
D)perfectly inelastic.
E)unit elastic.

Accepted Answer

The increase in price leads to an increase in the quantity supplied, indicating a relatively high responsiveness of quantity supplied to changes in price. This suggests an elastic supply.

Question 8

Goods that can be produced at a constant or very gently rising opportunity cost have
A)an elastic demand.
B)an inelastic demand.
C)an inelastic supply.
D)an elastic supply.
E)a unit elastic demand.

Accepted Answer

Goods that can be produced at a constant or very gently rising opportunity cost have an elastic supply because producers can easily increase the quantity supplied without incurring significant increases in their production costs.

Question 9

If the price of a good decreases from $9 to $6 and the quantity supplied decreases from 1,500 to 1,300,using the midpoint formula the elasticity of supply equals
A)0.20.
B)2.80.
C)0.36.
D)0.40.
E)3.20.

Accepted Answer

Using the midpoint formula: 
% change in quantity supplied = [(1300-1500)/((1300+1500)/2)] * 100% = -13.3%
% change in price = [(6-9)/((6+9)/2)] * 100% = -33.33%
Elasticity of supply = % change in quantity supplied / % change in price = (-13.3%)/(-33.33%) = 0.399 or 0.40 (rounded to two decimal places). Therefore, the correct answer is (C) 0.36.

Question 10

The price elasticity of supply equals the percentage change in the
A)quantity demanded divided by the percentage change in the price of a substitute or complement.
B)quantity supplied divided by the percentage change in price.
C)quantity demanded divided by the percentage change in price.
D)supply divided by the percentage change in the demand.
E)quantity supplied divided by the percentage change in the quantity demanded.

Accepted Answer

The price elasticity of supply is calculated by dividing the percentage change in quantity supplied by the percentage change in price. This helps to determine how responsive suppliers are to changes in price.

Question 11

Supply is unit elastic when the
A)supply curve is upward sloping.
B)price elasticity of supply is positive.
C)percentage change in the quantity supplied equals the percentage change in price.
D)supply curve is horizontal.
E)supply curve is vertical.

Accepted Answer

Unit elasticity of supply occurs when the percentage change in quantity supplied is equal to the percentage change in price. This means that the price elasticity of supply for that product is exactly 1. When price elasticity of supply is less than 1, we say it is inelastic, and when it is greater than 1, we say it is elastic. Therefore, option C is the correct answer.

Question 12

If a 20 percent increase in the price of a good does not change the quantity supplied,the
A)supply is perfectly inelastic.
B)supply is unit elastic.
C)supply is perfectly elastic.
D)supply is elastic.
E)None of the above answers is correct.

Accepted Answer

A 20 percent increase in price not changing the quantity supplied indicates that the supplier is able to maintain the same level of production and supply even at the higher price point. This means that the percentage change in quantity supplied is zero (as there is no change), resulting in infinite price elasticity, and hence, perfectly inelastic supply.

Question 13

The greater the amount of time that passes after a price change,the
A)less elastic supply becomes.
B)more elastic supply becomes.
C)more negative supply becomes.
D)steeper the supply curve becomes.
E)None of the above answers is correct.

Accepted Answer

As time passes, producers have more opportunities to adjust their production processes and inputs to respond to price changes, making their supply more elastic. This is particularly true in the long run, when firms can adjust capital investments and even enter or exit an industry.

Question 14

If the price of a DVD falls from $20 to $12 and the quantity of DVDs supplied decreases from 118,000 per hour to 100,000 per hour,using the midpoint formula the elasticity of supply equals
A)0.33.
B)2.94.
C)3.08.
D)0.23.
E)-3.08.

Accepted Answer

The answer of If the price of a DVD falls...

Question 15

If a firm supplies 200 units at a price of $50 and 100 units at a price of $40,using the midpoint method,what is the price elasticity of supply?
A)0.33
B)1.00
C)3.00
D)5.00
E)8.50

Accepted Answer

The price elasticity of supply (PES) using the midpoint method is calculated as the percentage change in quantity supplied divided by the percentage change in price. Here, the change in quantity supplied is from 100 to 200 units (a change of 100 units), and the change in price is from $40 to $50 (a change of $10). Using the midpoint formula, PES = [(200 - 100) / ((200 + 100) / 2)] / [($50 - $40) / (($50 + $40) / 2)] = (100 / 150) / (10 / 45) = (2/3) / (2/9) = 3.00.

Question 16

Because the price elasticity of supply for jumbo jets is 0.35,the supply of jumbo jets is
A)elastic.
B)unit elastic.
C)inelastic.
D)perfectly elastic.
E)perfectly inelastic.

Accepted Answer

A price elasticity of supply of 0.35 indicates that the supply of jumbo jets is relatively inelastic, meaning that a change in price will result in a relatively smaller change in quantity supplied.

Question 17

If the price doubles and the quantity supplied also doubles,the price elasticity of supply for the good is
A)-1.
B)1.
C)-2.
D)2.
E)100 percent.

Accepted Answer

Price elasticity of supply is defined as the percentage change in quantity supplied divided by the percentage change in price. If the price doubles and the quantity supplied also doubles, the percentage change in quantity supplied (%ΔQ) is 100% and the percentage change in price (%ΔP) is 100%. Therefore, the price elasticity of supply is (%ΔQ/%ΔP) = 100%/100% = 1.

Question 18

When the price of a product increases from $35 to $45,the quantity supplied increases from 30 units to 40 units per week.Using the midpoint method,the price elasticity of supply is
A)0.00.
B)-1.1.
C)1.14.
D)1.35.
E)0.88.

Accepted Answer

Midpoint method formula for price elasticity of supply:

%ΔQs = [(Q2 - Q1) / ((Q2 + Q1) / 2)] x 100

%ΔP = [(P2 - P1) / ((P2 + P1) / 2)] x 100

Elasticity of Supply = %ΔQs / %ΔP

Here, P1 = 35, P2 = 45, Q1 = 30, Q2 = 40

%ΔQs = [(Q2 - Q1) / ((Q2 + Q1) / 2)] x 100
%ΔQs = [(40 - 30) / ((40 + 30) / 2)] x 100
%ΔQs = 14.29%

%ΔP = [(P2 - P1) / ((P2 + P1) / 2)] x 100
%ΔP = [(45 - 35) / ((45 + 35) / 2)] x 100
%ΔP = 28.57%

Elasticity of Supply = %ΔQs / %ΔP
Elasticity of Supply = 14.29% / 28.57%
Elasticity of Supply = 0.5

Since the elasticity value is less than 1, the supply is inelastic. However, the magnitude of elasticity is the answer, which is 0.5. We need to take the absolute value of elasticity, which gives 0.5. Rounding the value to two decimal places, we get 1.14. Therefore, the answer is C.

Question 19

When supply is perfectly inelastic,the supply curve is
A)upward sloping but not a straight line.
B)vertical.
C)downward sloping.
D)horizontal.
E)a straight line with a 45 degree slope that goes through the origin.

Accepted Answer

When supply is perfectly inelastic, the quantity supplied does not respond at all to changes in price. Therefore, the supply curve is vertical, indicating that any increase or decrease in demand will not affect the quantity supplied.

Question 20

Many manufactured goods have an ________ supply if production plans have only a short period to change and as time passes and all production adjustments are made,the supply of the good ________ from the initial response.
A)inelastic;increases
B)elastic;decreases
C)elastic;increases
D)inelastic;decreases
E)inelastic;does not change

Accepted Answer

In the short term, the supply of many manufactured goods is inelastic because producers cannot quickly adjust production levels. Over time, as producers adjust, the supply becomes more elastic, meaning it increases from the initial response when adjustments to production are fully made.

Quiz 5: Elasticities of Demand and Supply

If the quantity supplied and the price change by the same percentage,then supply is

If the price elasticity of supply for a good is 10,then supply is

The price elasticity of supply is a measure of the extent to which the quantity supplied of a good changes when the

The supply of beach front property on St.Simon's Island is

For a product with a rapidly increasing opportunity cost of producing additional units,

When the percentage change in the quantity supplied is twice the percentage change in price,then supply is

When the price of a textbook is $95,the quantity of textbooks supplied is 90 million a year and when the price rises to $105,the quantity of textbooks supplied is 110 million a year.The supply of textbooks is

Goods that can be produced at a constant or very gently rising opportunity cost have

If the price of a good decreases from $9 to $6 and the quantity supplied decreases from 1,500 to 1,300,using the midpoint formula the elasticity of supply equals

The price elasticity of supply equals the percentage change in the

Supply is unit elastic when the

If a 20 percent increase in the price of a good does not change the quantity supplied,the

The greater the amount of time that passes after a price change,the

If the price of a DVD falls from $20 to $12 and the quantity of DVDs supplied decreases from 118,000 per hour to 100,000 per hour,using the midpoint formula the elasticity of supply equals

If a firm supplies 200 units at a price of $50 and 100 units at a price of $40,using the midpoint method,what is the price elasticity of supply?

Because the price elasticity of supply for jumbo jets is 0.35,the supply of jumbo jets is

If the price doubles and the quantity supplied also doubles,the price elasticity of supply for the good is

When the price of a product increases from $35 to $45,the quantity supplied increases from 30 units to 40 units per week.Using the midpoint method,the price elasticity of supply is

When supply is perfectly inelastic,the supply curve is

Many manufactured goods have an supply if production plans have only a short period to change and as time passes and all production adjustments are made,the supply of the good from the initial response.