Question 1

When a higher price cannot bring about any increase in the quantity supplied, the supply is
A) perfectly elastic.
B) unit elastic.
C) zero.
D) perfectly inelastic.
E) infinity.

Accepted Answer

Perfectly inelastic supply means that no matter how high the price goes, the quantity supplied will remain the same. So, a higher price cannot bring about any increase in the quantity supplied.

Question 2

Price elasticity of supply is 1 minus the price elasticity of demand.

Accepted Answer

Price elasticity of supply measures the responsiveness of suppliers to changes in price, while price elasticity of demand measures the responsiveness of consumers to changes in price. They are not simply opposite measures of each other.

Question 3

Which of the following formulas is a correct expression of the price elasticity of supply?
A) 
B) 
C) 
D) 
E)

Accepted Answer

The answer of Which of the following formulas is a...

Question 4

A perfectly elastic supply curve is vertical, and a perfectly elastic demand curve is horizontal.

Accepted Answer

A perfectly elastic supply curve is horizontal, indicating that suppliers are willing to supply any quantity at a specific price. A perfectly elastic demand curve is vertical, indicating that consumers are willing to buy any quantity at a specific price.

Question 5

Which of the following is the equation for price elasticity of supply?
A) 
B) 
C) 
D) 
E)

Accepted Answer

The answer of Which of the following is the equation...

Question 6

A price elasticity of supply of 1.5 implies that
A) a 20 percent increase in the quantity supplied increases the price by 30 percent.
B) total revenue is 1.5 times total cost.
C) a 20 percent increase in the price increases the quantity supplied by 30 percent.
D) a 20-unit increase in supply reduces the price by $30.
E) a $20 increase in the price increases the quantity supplied by 30 units.

Accepted Answer

A price elasticity of supply of 1.5 means that a 1% increase in the price will lead to a 1.5% increase in the quantity supplied. Therefore, a 20% increase in price would lead to a 30% increase in quantity supplied.

Question 7

Elasticity of supply is
A) the responsiveness of supply to changes in costs.
B) the percentage change in quantity supplied due to a percentage change in price.
C) the responsiveness of the price to changes in supply.
D) 1 minus the elasticity of demand.
E) the change in quantity supplied due to a change in quantity demanded.

Accepted Answer

Elasticity of supply refers to the percentage change in quantity supplied due to a percentage change in price. It measures the responsiveness of suppliers to changes in price. Therefore, option B is the best choice. A refers to the responsiveness of supply to changes in costs, which is not the definition of elasticity of supply. C refers to the responsiveness of price to changes in supply, which is the definition of elasticity of demand. D is the compliment of the elasticity of demand and not related to elasticity of supply. E refers to the change in quantity supplied due to a change in quantity demanded, which is not the definition of elasticity of supply.

Question 8

Supply may be elastic, unit elastic, or inelastic.

Accepted Answer

This statement is true. Supply can have varying degrees of elasticity depending on factors such as the availability of resources, production technology, and time horizon.

Question 9

If a 2 percent increase in price results in a 1 percent increase in the quantity supplied, the price elasticity of supply is 2.

Accepted Answer

The price elasticity of supply in this scenario would be 0.5, not 2. Price elasticity of supply measures the responsiveness of quantity supplied to a change in price, and is calculated as the percentage change in quantity supplied divided by the percentage change in price. In this case, a 2 percent increase in price results in a 1 percent increase in quantity supplied, which translates to a price elasticity of supply of (1%/2%) = 0.5.

Question 10

The price elasticity of supply is the percentage change in quantity supplied divided by the percentage change in price.

Accepted Answer

This is the correct definition of price elasticity of supply. It measures the responsiveness of the quantity supplied to changes in price.

Question 11

The price elasticity of supply is a unit-free measure and uses percentage changes in quantity supplied and price to measure how sensitive supply is to a change in price.

Accepted Answer

This is correct. The price elasticity of supply is defined as the percentage change in quantity supplied divided by the percentage change in price. Since these are both measured as percentages, the resulting elasticity value is unit-free.

Question 12

The price elasticity of supply is a measure of how
A) long it takes for producers to change technology.
B) sensitive producers are to a change in technology.
C) long it takes for producers to change their prices.
D) sensitive producers are to a change in input prices.
E) sensitive producers are to a change in output price.

Accepted Answer

The price elasticity of supply measures the responsiveness of producers to a change in the price of their output. Therefore, the correct choice is E: sensitive producers are to a change in output price.

Question 13

If the quantity supplied of a product stays the same no matter what its price, then the elasticity of supply of the product is
A) perfectly elastic.
B) unit elastic.
C) zero.
D) perfectly inelastic.
E) infinity.

Accepted Answer

If the quantity supplied of a product remains constant regardless of changes in price, it indicates that the supply is perfectly inelastic. This means that even if the price increases, the quantity supplied will not increase.

Question 14

Assume that a firm makes available 50 more units of a good at a price of $2 than it made available when the price was $1. What is the price elasticity of supply?
A) It cannot be determined from the information given.
B) .02
C) 25
D) 50
E) .04

Accepted Answer

The answer of Assume that a firm makes available 50...

Question 15

When a given percentage change in the price leads to a larger percentage change in the quantity supplied, supply is said to be
A) elastic.
B) unit elastic.
C) inelastic.
D) infinitely elastic.
E) perfectly inelastic.

Accepted Answer

Elasticity of supply measures the responsiveness of quantity supplied to a given change in price. If the percentage change in price leads to a larger percentage change in quantity supplied, then supply is considered to be elastic.

Question 16

If supply is perfectly inelastic, then the price elasticity of supply is infinity.

Accepted Answer

If supply is perfectly inelastic, it means that the quantity supplied does not change in response to a change in price. This implies that there is no responsiveness to price changes, which means that the price elasticity of supply is zero, not infinity.

Question 17

If supply is perfectly elastic, then the supply curve must
A) be vertical.
B) be horizontal.
C) be upward sloping.
D) be downward sloping.
E) have a slope of zero.

Accepted Answer

If supply is perfectly elastic, this means that producers can supply infinite quantities of the good at the given price. Therefore, the supply curve must be horizontal, as the price will not affect the quantity supplied.

Question 18

If the quantity supplied of a good is fixed at 100 units at all price levels, then its price elasticity of supply is
A) perfectly elastic.
B) unit elastic.
C) perfectly inelastic.
D) zero.
E) undefined.

Accepted Answer

If the quantity supplied of a good is fixed at 100 units at all price levels, then the percentage change in quantity supplied will always be zero regardless of the change in price. Hence, price elasticity of supply will be zero, making it perfectly inelastic.

Question 19

Supply is elastic if the quantity supplied responds substantially to a change in price, and supply is inelastic if the quantity supplied responds only slightly to a change in price.

Accepted Answer

This is the correct definition of elasticity of supply.

Question 20

The price elasticity of supply is always negative.

Accepted Answer

The price elasticity of supply can be positive if the quantity supplied increases in response to an increase in price, especially in the long run. However, in most cases, it is expected to be positive.

Quiz 4: Subtleties of the Supply and Demand Model: Price Floors, Price Ceilings, and Elasticity

When a higher price cannot bring about any increase in the quantity supplied, the supply is

Price elasticity of supply is 1 minus the price elasticity of demand.

Which of the following formulas is a correct expression of the price elasticity of supply?

A perfectly elastic supply curve is vertical, and a perfectly elastic demand curve is horizontal.

Which of the following is the equation for price elasticity of supply?

A price elasticity of supply of 1.5 implies that

Elasticity of supply is

Supply may be elastic, unit elastic, or inelastic.

If a 2 percent increase in price results in a 1 percent increase in the quantity supplied, the price elasticity of supply is 2.

The price elasticity of supply is the percentage change in quantity supplied divided by the percentage change in price.

The price elasticity of supply is a unit-free measure and uses percentage changes in quantity supplied and price to measure how sensitive supply is to a change in price.

The price elasticity of supply is a measure of how

If the quantity supplied of a product stays the same no matter what its price, then the elasticity of supply of the product is

Assume that a firm makes available 50 more units of a good at a price of $2 than it made available when the price was $1. What is the price elasticity of supply?

When a given percentage change in the price leads to a larger percentage change in the quantity supplied, supply is said to be

If supply is perfectly inelastic, then the price elasticity of supply is infinity.

If supply is perfectly elastic, then the supply curve must

If the quantity supplied of a good is fixed at 100 units at all price levels, then its price elasticity of supply is

Supply is elastic if the quantity supplied responds substantially to a change in price, and supply is inelastic if the quantity supplied responds only slightly to a change in price.

The price elasticity of supply is always negative.