Question 1

Determinants of the price elasticity of supply are:
A) adjustment time, whether the good is a luxury or a necessity.
B) availability of inputs, adjustment time.
C) flexibility of the production process, whether the good is a luxury or a necessity.
D) availability of inputs, whether the good is a luxury or a necessity.

Accepted Answer

The availability of inputs and adjustment time are the two main determinants of the price elasticity of supply. The flexibility of the production process and whether the good is a luxury or a necessity can also play a role, but they are not as significant as the availability of inputs and adjustment time.

Question 2

A corn farmer is likely to have a _____________ price elasticity of supply than does a tree farmer due to ________________.
A) more elastic; a more flexible production process
B) less elastic; a more flexible production process
C) less elastic; a less flexible production process
D) more elastic; a less flexible production process

Accepted Answer

The answer of A corn farmer is likely to have...

Question 3

Suppose when the price of novels goes from $15 to $20 per book, production increases from 760 million books to 840 million books per year. Using the mid-point method, the price elasticity of supply is:
A) 0.77
B) 28.5 percent
C) 37 percent
D) 0.35

Accepted Answer

The answer of Suppose when the price of novels goes...

Question 4

A rare coin dealer is likely to have a _______________ price elasticity of supply than does a coffee shop due to ____________________.
A) more elastic; the availability of inputs
B) less elastic; the availability of inputs
C) more elastic; a longer adjustment time
D) more elastic; a shorter adjustment time

Accepted Answer

The answer of A rare coin dealer is likely to...

Question 5

Suppose when the price of shoe laces goes from $1 to $2 per pair, production increases from 95 million pairs to 105 million pairs per year. Using the mid-point method, the price elasticity of supply is:
A) 6.28
B) 66 percent
C) 10.5 percent
D) 0.15

Accepted Answer

The answer of Suppose when the price of shoe laces...

Question 6

A determinant of the price elasticity of supply that is also a determinant of the price elasticity of demand is:
A) availability of inputs.
B) flexibility of the production process.
C) adjustment time.
D) whether the good is a luxury or a necessity.

Accepted Answer

Adjustment time is a determinant that affects both the price elasticity of supply and the price elasticity of demand. This is because both the producers and the consumers require some amount of time to adjust to changes in the price of the product. For example, in the short run, producers may not be able to increase the supply of a good as much as they would in the long run, and consumers may not be able to decrease their demand for a good as much as they would in the long run. Therefore, adjustment time affects the responsiveness of both supply and demand to price changes, and hence affects their respective elasticities.

Question 7

An automobile manufacturing plant is likely to have a ______________ price elasticity of supply than a bread bakery due to _________________.
A) more elastic; a more flexible production process
B) more elastic; greater availability of inputs
C) less elastic; a less flexible production process
D) more elastic; lower availability of inputs

Accepted Answer

Automobile manufacturing involves complex processes and requires more time to adjust production levels compared to a bread bakery, which can more easily and quickly change its output in response to price changes. This makes the automobile manufacturing plant's supply less elastic.

Question 8

Suppose when the price of pizza goes from $8 to $12 per pie, production increases from 2,500 pies to 4,000 pies per month. Using the mid-point method, the percentage change in price is:
A) 40 percent
B) 46 percent
C) 1.31
D) 0.35

Accepted Answer

The answer of Suppose when the price of pizza goes...

Question 9

The price elasticity of supply tells us:
A) the percentage change in quantity supplied when the price of the good changes by one percent.
B) in which direction the quantity supplied changes as we move along the supply curve.
C) how quickly the supply will respond to a change in price.
D) the magnitude of shift in the supply curve in response to a change in price.

Accepted Answer

The answer of The price elasticity of supply tells us:
A)...

Question 10

Cross-price elasticity refers to:
A) how much the quantity demanded of one good changes in response to a change in the price of a different good.
B) how much the quantity demanded of one good changes in response to a change in its price.
C) the magnitude of the shift in demand for a good in response to a change in its price.
D) how much the quantity demanded of a good changes in response to a change in consumers' incomes.

Accepted Answer

Cross-price elasticity measures the responsiveness of the quantity demanded for one good to a change in the price of a different good.

Question 11

Suppose when the price of pineapples goes from $5 to $3 per pineapple, production decreases from 3,500 pineapples to 2,000 pineapples per year. Using the mid-point method, the percentage change in price would be:
A) 0.50
B) 50 percent
C) 0.54
D) 54 percent

Accepted Answer

The answer of Suppose when the price of pineapples goes...

Question 12

How much the demand for one good changes in response to a change in the price of a different good is measured by:
A) price elasticity of supply.
B) price elasticity of demand.
C) income elasticity.
D) cross-price elasticity.

Accepted Answer

The change in demand for one good in response to a change in the price of a different good is measured by cross-price elasticity. Cross-price elasticity measures the responsiveness of demand for one good to changes in the price of another good. If the two goods are substitutes, an increase in the price of one good leads to an increase in the demand for the other good, resulting in a positive cross-price elasticity. If the two goods are complements, an increase in the price of one good leads to a decrease in the demand for the other good, resulting in a negative cross-price elasticity.

Question 13

A baker of chocolate chip cookies is likely to have a ______________ price elasticity of supply than does the seller of rare baseball cards due to ______________.
A) more elastic; the availability of inputs
B) less elastic; the availability of inputs
C) less elastic; a shorter adjustment time
D) less elastic; a more flexible production process

Accepted Answer

A baker of chocolate chip cookies is likely to have a more elastic price elasticity of supply than does the seller of rare baseball cards due to the availability of inputs. The process of making cookies requires easily obtainable ingredients such as flour, sugar, and chocolate chips, which can be quickly replenished if there is an increase in demand. In contrast, rare baseball cards are not easily available and cannot be quickly replenished if there is an increase in demand, making the seller's supply less elastic.

Question 14

A tavern is likely to have a ______________________ price elasticity of supply than does an antiques dealer due to ______________________.
A) more elastic; availability of inputs
B) less elastic; availability of inputs
C) less elastic; a longer adjustment time
D) less elastic; a shorter adjustment time

Accepted Answer

The answer of A tavern is likely to have a...

Question 15

Suppose when the price of coffee beans goes from $1 to $1.20 per pound, production increases from 90 million pounds of coffee beans to 110 million pounds per year. Using the mid-point method, the percentage change in quantity supplied is:
A) 20 percent
B) 18 percent
C) 0.6
D) 6.0

Accepted Answer

The answer of Suppose when the price of coffee beans...

Question 16

For many consumers, bacon and eggs are complements. Therefore, egg producers monitor the price of bacon because the cross elasticity between bacon and eggs is
A) negative, and a decrease in the price of bacon will decrease the demand for eggs.
B) positive, and a decrease in the price of bacon will increase the demand for eggs.
C) negative, and a decrease in the price of bacon will increase the demand for eggs.
D) positive, and an increase in the price of bacon will increase the demand for eggs.

Accepted Answer

The answer of For many consumers, bacon and eggs are...

Question 17

Which elasticity measures producers' responsiveness to a change in price?
A) Price elasticity of demand
B) Cross-price elasticity
C) Price elasticity of supply
D) Income elasticity of supply

Accepted Answer

The price elasticity of supply measures the responsiveness of producers to a change in price. This elasticity shows the percentage change in quantity supplied in relation to a percentage change in price. If the price elasticity of supply is high (greater than 1), producers are very responsive to changes in price and will quickly adjust their production levels accordingly. If the price elasticity of supply is low (less than 1), producers are not very responsive to changes in price and will likely take longer to adjust their production levels.

Question 18

Gasoline and motel rooms are complements for many consumers. When the price of gasoline declines, consumers take longer vacations and rent more motel rooms. Therefore, the cross price elasticity between gasoline and motel rooms is
A) positive.
B) negative.
C) less than one because neither is a luxury.
D) more than one because both are luxuries.

Accepted Answer

The answer of Gasoline and motel rooms are complements for...

Question 19

The percentage change in the quantity supplied of a good or service when its price changes by one percent is:
A) price elasticity of supply.
B) price elasticity of demand.
C) cross-price elasticity.
D) income elasticity of supply.

Accepted Answer

The percentage change in quantity supplied when the price changes by one percent is known as price elasticity of supply. The formula for price elasticity of supply is the percentage change in quantity supplied divided by the percentage change in price.

Question 20

The price elasticity of supply is __________ elastic over time because ___________.
A) less; producers get accustomed to the price changes
B) less; the ideal number of firms have time to move into or out of the industry
C) more; producers have a longer time to adjust their production decisions
D) more; producers get accustomed to the price changes

Accepted Answer

The price elasticity of supply is more elastic over time because producers have a longer time to adjust their production decisions, such as investing in new machinery or changing the number of workers. In the short run, producers may not be able to quickly adjust their output in response to changes in price. However, over time, producers can make changes that will make their supply more elastic.

Quiz 4: Elasticity

Determinants of the price elasticity of supply are:

A corn farmer is likely to have a _ price elasticity of supply than does a tree farmer due to ____.

Suppose when the price of novels goes from $15 to $20 per book, production increases from 760 million books to 840 million books per year. Using the mid-point method, the price elasticity of supply is:

A rare coin dealer is likely to have a _ price elasticity of supply than does a coffee shop due to ______.

Suppose when the price of shoe laces goes from $1 to $2 per pair, production increases from 95 million pairs to 105 million pairs per year. Using the mid-point method, the price elasticity of supply is:

A determinant of the price elasticity of supply that is also a determinant of the price elasticity of demand is:

An automobile manufacturing plant is likely to have a price elasticity of supply than a bread bakery due to ___.

Suppose when the price of pizza goes from $8 to $12 per pie, production increases from 2,500 pies to 4,000 pies per month. Using the mid-point method, the percentage change in price is:

The price elasticity of supply tells us:

Cross-price elasticity refers to:

Suppose when the price of pineapples goes from $5 to $3 per pineapple, production decreases from 3,500 pineapples to 2,000 pineapples per year. Using the mid-point method, the percentage change in price would be:

How much the demand for one good changes in response to a change in the price of a different good is measured by:

A baker of chocolate chip cookies is likely to have a price elasticity of supply than does the seller of rare baseball cards due to .

A tavern is likely to have a price elasticity of supply than does an antiques dealer due to .

Suppose when the price of coffee beans goes from $1 to $1.20 per pound, production increases from 90 million pounds of coffee beans to 110 million pounds per year. Using the mid-point method, the percentage change in quantity supplied is:

For many consumers, bacon and eggs are complements. Therefore, egg producers monitor the price of bacon because the cross elasticity between bacon and eggs is

Which elasticity measures producers' responsiveness to a change in price?

Gasoline and motel rooms are complements for many consumers. When the price of gasoline declines, consumers take longer vacations and rent more motel rooms. Therefore, the cross price elasticity between gasoline and motel rooms is

The percentage change in the quantity supplied of a good or service when its price changes by one percent is:

The price elasticity of supply is elastic over time because _.