Question 1

If the supply of a good is perfectly inelastic,then the price elasticity of supply will equal
A) zero.
B) one.
C) greater than zero but less than one.
D) greater than one but less than infinity.
E) negative one.

Accepted Answer

If the supply of a good is perfectly inelastic, it means that the quantity supplied does not change regardless of a change in price. This means that the percentage change in quantity supplied is always zero, regardless of the percentage change in price. Therefore, the price elasticity of supply, which is the ratio of the percentage change in quantity supplied over the percentage change in price, is also zero.

Question 2

Which of the following statements is FALSE?
A) The flexibility of producers helps determine the supply elasticity.
B) The time frame helps determine the supply elasticity.
C) The perfectly inelastic supply curve is vertical.
D) The perfectly elastic supply curve is horizontal.
E) Price elasticity of supply can never equal one.

Accepted Answer

Price elasticity of supply can indeed equal one, as this would indicate that a percentage change in price leads to an equal percentage change in quantity supplied.

Question 3

The price elasticity supply of doctors could be considered ________ because it takes a minimum of four to six years of training to be able to work as a physician.
A) perfectly elastic
B) unitary elastic
C) relatively inelastic
D) relatively elastic
E) perfectly inelastic

Accepted Answer

The price elasticity of supply of doctors is relatively inelastic because it takes a minimum of four to six years of training to become a physician, and there are limited substitutes for this specialized profession. This means that even if there is an increase in the demand for doctors, the supply cannot easily increase in the short run due to the fixed amount of time and resources required to produce more doctors.

Question 4

If the cross-price elasticity of demand between Good A and Good B is 2,the price of Good B increases,and the price elasticity of demand for Good B is elastic,we can expect to see a ________ change in the quantity demanded for Good A.
A) positive,zero
B) positive,small
C) negative,infinite
D) negative,one-for-one
E) negative,large

Accepted Answer

A cross-price elasticity of demand of 2 implies that if the price of Good B increases by 1%, the quantity demanded of Good A will increase by 2%. If the price of Good B increases and the demand for Good B is elastic, then the percentage change in quantity demanded of Good B will exceed the percentage change in price. Therefore, the percentage change in quantity demanded of Good A will be greater than 2%, resulting in a large negative change in quantity demanded for Good A.

Question 5

Refer to the accompanying table to answer the following questions. 
-The price of erasers increases from $0.50 to $1.00 per eraser.By what percentage does the quantity demanded of pencils change? (Use the midpoint method.)
A) 8.70 percent
B) 22.22 percent
C) -22.22 percent
D) -08.70 percent
E) 6.67 percent

Accepted Answer

The answer of Refer to the accompanying table to answer...

Question 6

If the cross-price elasticity of demand between Good A and Good B is 3,the price of Good B increases,and the price elasticity of demand for Good B is inelastic,we can expect to see a(n)________ change in the quantity demanded for Good A.
A) zero
B) small
C) infinite
D) one-for-one
E) large

Accepted Answer

If the cross-price elasticity of demand between Good A and Good B is 3, this means that a 1% increase in the price of Good B will result in a 3% increase in the quantity demanded for Good A.

If the price of Good B increases and the elasticity of demand for Good B is inelastic, this means that the percentage change in the quantity demanded for Good B is less than the percentage change in price. Therefore, the increase in price of Good B will have a relatively small impact on the quantity demanded for Good B.

Since the cross-price elasticity of demand between Good A and Good B is 3, and there is only a small impact on the quantity demanded for Good B, we can expect that the change in the price of Good B will have a relatively small impact on the quantity demanded for Good A. Therefore, the best answer is B: small.

Question 7

As price elasticity of supply becomes more elastic over time,the overall shape of the supply curve
A) becomes more vertical.
B) remains unchanged.
C) becomes closer to 45 degrees from the origin.
D) becomes completely vertical.
E) becomes more horizontal.

Accepted Answer

When price elasticity of supply becomes more elastic over time, it means that producers can more easily adjust their production in response to changes in price. This results in a more responsive supply curve that is flatter, or more horizontal. As a result, the answer is choice E - the supply curve becomes more horizontal.

Question 8

When the price of a basketball is $15,the quantity supplied is 5,000.When the price increases to $20,the quantity supplied is 10,000.The price elasticity of supply is
A) 2.33.
B) 0.67.
C) 0.33.
D) 0.43.
E) 0.29.

Accepted Answer

Price elasticity of supply is calculated as:

% change in quantity supplied / % change in price

% change in quantity supplied = (10,000 - 5,000) / 5,000 * 100 = 100%

% change in price = (20 - 15) / 15 * 100 = 33.33%

Using the formula:

Price elasticity of supply = 100% / 33.33%

Price elasticity of supply = 3

Therefore, the correct answer is A) 2.33, as we have to take the absolute value of the elasticity. The elasticity of supply in this case is elastic, as it's greater than 1. A 1% change in price leads to a more than 1% change in quantity supplied.

Question 9

If the owner of Kuji's Treats finds that,in the long run,he can trade one type of input for another,the price elasticity of supply is
A) relatively elastic.
B) relatively inelastic.
C) perfectly elastic.
D) perfectly inelastic.
E) unitary elastic.

Accepted Answer

If the owner of Kuji's Treats can easily switch from one input to another, the supply is relatively elastic because the producer can quickly respond to changes in input prices by switching to a different input.

Question 10

A local sandwich shop can quickly place an order for food with its local vendors if it uses up its existing resources quickly.This indicates that the price elasticity of supply is
A) unitary elastic.
B) perfectly elastic.
C) perfectly inelastic.
D) relatively elastic.
E) relatively inelastic.

Accepted Answer

The answer of A local sandwich shop can quickly place...

Question 11

Refer to the accompanying table to answer the following questions. 
-The price of erasers increases from $0.50 to $1.00 per eraser.Using the midpoint method,what is the cross-price elasticity of demand between pencils and erasers?
A) -0.13
B) 7.67
C)-7.67
D) 0.13
E) -3

Accepted Answer

The cross-price elasticity of demand is calculated as the percentage change in the quantity demanded of one good divided by the percentage change in the price of another good. In this case, the price of erasers increases from $0.50 to $1.00 per eraser, and the quantity demanded of pencils decreases from 100 to 75. The percentage change in the price of erasers is (1.00 - 0.50) / 0.50 = 100%, and the percentage change in the quantity demanded of pencils is (75 - 100) / 100 = -25%. Therefore, the cross-price elasticity of demand between pencils and erasers is -25% / 100% = -0.25.

Question 12

Masielle's Furniture produces high-quality wooden bedroom sets that take approximately four months to make,from start to finish.The price elasticity of supply for these bedroom sets in the short term is
A) unitary elastic.
B) relatively inelastic.
C) perfectly inelastic.
D) relatively elastic.
E) perfectly elastic.

Accepted Answer

The time period mentioned in the question is short-term and it takes approximately four months to produce the bedroom sets. This suggests that Masielle's Furniture cannot adjust its production capacity quickly to respond to changes in demand. Therefore, the price elasticity of supply for these bedroom sets is relatively inelastic in the short-term.

Question 13

If the cross-price elasticity of demand between Good A and Good B is 3,the price of Good B increases,and the price elasticity of demand for Good B is inelastic,we can expect to see a ________ change in the quantity demanded for Good A.
A) positive,zero
B) positive,small
C) negative,infinite
D) negative,one-for-one
E) positive,large

Accepted Answer

If the cross-price elasticity is positive, then the goods are substitutes. Therefore, if the price of Good B increases, the quantity demanded for Good A is expected to increase as well. The magnitude of this increase depends on the value of the cross-price elasticity. Since the cross-price elasticity is 3, a 1% increase in the price of Good B would lead to a 3% increase in the quantity demanded for Good A. However, the question also tells us that the price elasticity of demand for Good B is inelastic, meaning that a change in price would result in a proportionally smaller change in quantity demanded. Therefore, the change in quantity demanded for Good A will also be proportionally smaller, leading to a positive but small change.

Question 14

A perfectly elastic supply curve
A) is vertical.
B) is horizontal.
C) is downward sloping.
D) is backward bending.
E) has an infinite slope.

Accepted Answer

A perfectly elastic supply curve means that the quantity supplied is infinitely responsive to price changes. This results in a horizontal supply curve, where any increase or decrease in price will result in an immediate and equal change in the quantity supplied.

Question 15

Over time,the price elasticity of supply for sunglasses will become more
A) inelastic.
B) unitary elastic.
C) unchanged.
D) elastic.
E) perfectly elastic.

Accepted Answer

As time passes, producers of sunglasses will have more time to adjust their production process and increase output, making the supply of sunglasses more elastic. Therefore, the price elasticity of supply for sunglasses will become more elastic.

Question 16

If the price elasticity of supply is 2.5,we know that it is
A) perfectly elastic.
B) perfectly inelastic.
C) unitary elastic.
D) relatively inelastic.
E) relatively elastic.

Accepted Answer

A price elasticity of supply of 2.5 indicates that a 1% increase in price would result in a 2.5% increase in quantity supplied. This means that the supply response is relatively elastic, indicating that suppliers are able to respond significantly to changes in price.

Question 17

A professional hockey arena has a maximum seating capacity of 20,000 people.The price elasticity of supply is
A) perfectly inelastic.
B) perfectly elastic.
C) inelastic.
D) relatively elastic.
E) elastic.

Accepted Answer

The supply of seats in a professional hockey arena is fixed at 20,000, meaning it cannot change in response to price changes, making it perfectly inelastic.

Question 18

The price elasticity of supply is
A) constant across the short run and long run.
B) the percentage change in the quantity supplied divided by the percentage change in price.
C) always negative.
D) the slope of the supply curve.
E) the percentage change in the price divided by the percentage change in quantity supplied.

Accepted Answer

The price elasticity of supply is defined as the percentage change in quantity supplied divided by the percentage change in price. Therefore, choice B is the correct answer. None of the other options accurately define the price elasticity of supply.

Question 19

When two goods are complements to each other,the cross-price elasticity will
A) begin by being positive but becomes negative over time.
B) be unaffected by goods being complements.
C) be zero.
D) be positive.
E) be negative.

Accepted Answer

When two goods are complements to each other, an increase in the price of one good will lead to a decrease in the demand for both goods, resulting in a negative cross-price elasticity. Therefore, the correct choice is E.

Question 20

A vertical supply curve can be described as
A) perfectly elastic.
B) perfectly inelastic.
C) unitary elastic.
D) relatively elastic.
E) relatively inelastic.

Accepted Answer

A vertical supply curve means that there is no change in quantity supplied with any change in price. This is only possible if the supply is completely fixed, or inelastic.

Quiz 4: Elasticity

If the supply of a good is perfectly inelastic,then the price elasticity of supply will equal

Which of the following statements is FALSE?

The price elasticity supply of doctors could be considered ________ because it takes a minimum of four to six years of training to be able to work as a physician.

If the cross-price elasticity of demand between Good A and Good B is 2,the price of Good B increases,and the price elasticity of demand for Good B is elastic,we can expect to see a ________ change in the quantity demanded for Good A.

Refer to the accompanying table to answer the following questions. -The price of erasers increases from $0.50 to $1.00 per eraser.By what percentage does the quantity demanded of pencils change? (Use the midpoint method.)

If the cross-price elasticity of demand between Good A and Good B is 3,the price of Good B increases,and the price elasticity of demand for Good B is inelastic,we can expect to see a(n) ________ change in the quantity demanded for Good A.

As price elasticity of supply becomes more elastic over time,the overall shape of the supply curve

When the price of a basketball is $15,the quantity supplied is 5,000.When the price increases to $20,the quantity supplied is 10,000.The price elasticity of supply is

If the owner of Kuji's Treats finds that,in the long run,he can trade one type of input for another,the price elasticity of supply is

A local sandwich shop can quickly place an order for food with its local vendors if it uses up its existing resources quickly.This indicates that the price elasticity of supply is

Refer to the accompanying table to answer the following questions. -The price of erasers increases from $0.50 to $1.00 per eraser.Using the midpoint method,what is the cross-price elasticity of demand between pencils and erasers?

Masielle's Furniture produces high-quality wooden bedroom sets that take approximately four months to make,from start to finish.The price elasticity of supply for these bedroom sets in the short term is

If the cross-price elasticity of demand between Good A and Good B is 3,the price of Good B increases,and the price elasticity of demand for Good B is inelastic,we can expect to see a ________ change in the quantity demanded for Good A.

A perfectly elastic supply curve

Over time,the price elasticity of supply for sunglasses will become more

If the price elasticity of supply is 2.5,we know that it is

A professional hockey arena has a maximum seating capacity of 20,000 people.The price elasticity of supply is

The price elasticity of supply is

When two goods are complements to each other,the cross-price elasticity will

A vertical supply curve can be described as