Question 1

Table 5-5
 
-Refer to Table 5-5.Which of the three supply curves represents the most elastic supply?

Accepted Answer

The answer of Table 5-5
 
-Refer to Table 5-5.Which of...

Question 2

Table 5-5
 
-Refer to Table 5-5.Along which of the supply curves does quantity supplied move proportionately more than the price?

Accepted Answer

Inelastic supply curves indicate that quantity supplied changes less than the price change. If the question states that quantity supplied moves proportionately less than the price along all supply curves, it implies inelastic supply for all.

Question 3

Holding all other factors constant and using the midpoint method,if a calculator manufacturer increases production from 40 to 50 units when price increases by 20 percent,then supply is

Accepted Answer

Using the midpoint method, the percentage change in quantity supplied is [(50-40)/((50+40)/2)]*100 = 22.22%. The percentage change in price is 20%. The price elasticity of supply is 22.22%/20% = 1.11, which is greater than 1, indicating that supply is elastic.

Question 4

If the price elasticity of supply is 0.8,and price increased by 5%,quantity supplied would

Accepted Answer

The answer of If the price elasticity of supply is...

Question 5

At a price of $1.00,a local coffee shop is willing to supply 100 cinnamon rolls per day.At a price of $1.20,the coffee shop would be willing to supply 150 cinnamon rolls per day.Using the midpoint method,the price elasticity of supply is about

Accepted Answer

The answer of At a price of $1.00,a local coffee...

Question 6

Suppose the price elasticity of supply for candles is 0.3 in the short run and 1.2 in the long run.If an increase in the demand for candles causes the price of candles to increase by 36%,then the quantity supplied of candles will increase by about

Accepted Answer

In the short run, the price elasticity of supply (PES) is 0.3, indicating that any change in price would result in a proportionately smaller change in quantity supplied. Therefore, the quantity supplied would increase by approximately:

0.3 x 36% = 10.8%

In the long run, the PES is 1.2, indicating a proportionately larger change in the quantity supplied in response to a change in price. Therefore, the quantity supplied would increase by approximately:

1.2 x 36% = 43.2%

Thus, the correct answer is option C.

Question 7

Suppose the price elasticity of supply for minivans is 0.3 in the short run and 1.2 in the long run.If an increase in the demand for minivans causes the price of minivans to increase by 5%,then the quantity supplied of minivans will increase by about

Accepted Answer

The answer of Suppose the price elasticity of supply for...

Question 8

If the price elasticity of supply is 1.2,and price increased by 5%,quantity supplied would

Accepted Answer

Price elasticity of supply (PES) measures the responsiveness of quantity supplied to a change in price. A PES of 1.2 means that quantity supplied will increase by 1.2% for every 1% increase in price. Therefore, if the price increases by 5%, quantity supplied will increase by 1.2% x 5 = 6%. Hence, the correct answer is B.

Question 9

Suppose that an increase in the price of melons from $1.30 to $1.80 per pound increases the quantity of melons that melon farmers produce from 1.2 million pounds to 1.6 million pounds.Using the midpoint method,what is the approximate value of the price elasticity of supply?

Accepted Answer

The midpoint method formula for price elasticity of supply is:

% change in quantity supplied = [(Q2 - Q1) / ((Q1 + Q2)/2)] x 100%
% change in price = [(P2 - P1) / ((P1 + P2)/2)] x 100%

Using the given values, we get:

% change in quantity supplied = [(1.6 - 1.2) / ((1.2 + 1.6)/2)] x 100% = 33.33%
% change in price = [(1.8 - 1.3) / ((1.3 + 1.8)/2)] x 100% = 38.46%

Therefore, the price elasticity of supply is:

|Elasticity| = % change in quantity supplied / % change in price

|Elasticity| = 33.33% / 38.46% ≈ 0.867 ≈ 0.89 (rounded to two decimal places)

Since elasticity is always positive, we can ignore the absolute value sign and round the answer to 0.89. This suggests that the supply of melons is relatively elastic, meaning that producers are relatively responsive to changes in price.

Question 10

On a certain supply curve,one point is (quantity supplied = 200,price = $2.00)and another point is (quantity supplied = 250,price = $2.50).Using the midpoint method,the price elasticity of supply is about

Accepted Answer

The answer of On a certain supply curve,one point is...

Question 11

Holding all other factors constant and using the midpoint method,if a candy manufacturer increases production by 20 percent when the market price of candy increases from $0.50 to $0.60,then supply is

Accepted Answer

The answer of Holding all other factors constant and using...

Question 12

Table 5-5
 
-Refer to Table 5-5.Which of the three supply curves represents the least elastic supply?

Accepted Answer

Supply curve A represents the least elastic supply because it is steeper, indicating that a small change in price will lead to a proportionately smaller change in quantity supplied. This suggests that producers are less willing or able to change their level of production in response to price changes.

Question 13

Scenario 5-1
Suppose that the supply of aged cheddar cheese is inelastic, and the supply of bread is elastic. Both goods are considered to be normal goods by a majority of consumers. Suppose that a large income tax increase decreases the demand for both goods by 10%.
-Refer to Scenario 5-1.The price elasticity of supply for bread could be

Accepted Answer

The supply of bread is elastic, which means the price elasticity of supply is greater than 1. Therefore, 1.5 is a plausible value for the price elasticity of supply for bread.

Question 14

Suppose the price elasticity of supply for soccer balls is 0.3 in the short run and 1.2 in the long run.If an increase in the demand for soccer balls causes the price of soccer balls to increase by 20%,then the quantity supplied of soccer balls will increase by about

Accepted Answer

In the short run, the price elasticity of supply (PES) is 0.3, which means that the quantity supplied of soccer balls will increase by 6% (20% increase in price divided by 0.3) in the short run.

In the long run, the PES is 1.2, which means that the quantity supplied of soccer balls will increase by 24% (20% increase in price divided by 1.2) in the long run.

Therefore, the correct answer is C, 6% in the short run and 24% in the long run.

Question 15

An increase in the price of cheese crackers from $2.25 to $2.45 per box causes suppliers of cheese crackers to increase their quantity supplied from 125 boxes per minute to 145 boxes per minute.Using the midpoint method,supply is

Accepted Answer

The answer of An increase in the price of cheese...

Question 16

A manufacturer produces 400 units when the market price of $10 per unit and produces 600 units when the market price is $12 per unit.Using the midpoint method,for this range of prices,the price elasticity of supply is about

Accepted Answer

The midpoint method formula for calculating price elasticity of supply is:

Price elasticity of supply = (Percentage change in quantity supplied) / (Percentage change in price)

Using the given information, we can calculate the percentage change in quantity supplied as follows:

[(600 - 400) / ((600 + 400) / 2)] x 100% = 33.33%

And the percentage change in price is:

[(12 - 10) / ((12 + 10) / 2)] x 100% = 16.67%

Substituting these values into the formula, we get:

Price elasticity of supply = 33.33% / 16.67% = 2.00

Therefore, the price elasticity of supply is approximately 2.2, which means that quantity supplied is relatively responsive to changes in price.

Question 17

If the price elasticity of supply is 1.2,and a price increase led to a 5% increase in quantity supplied,then the price increase is about

Accepted Answer

Price elasticity of supply (PES) = percentage change in quantity supplied ÷ percentage change in price
Here, PES = 1.2
Percentage change in quantity supplied = 5%
Let the percentage change in price be x%
So, PES = 1.2 = 5%/x%
x% = 5%/1.2 = 4.17%
Therefore, the price increase is about 4.2%. (Option B)

Question 18

Scenario 5-1
Suppose that the supply of aged cheddar cheese is inelastic, and the supply of bread is elastic. Both goods are considered to be normal goods by a majority of consumers. Suppose that a large income tax increase decreases the demand for both goods by 10%.
-Refer to Scenario 5-1.The price elasticity of supply for aged cheddar cheese could be

Accepted Answer

The supply of aged cheddar cheese is inelastic, which means the price elasticity of supply is less than 1. A value of 0.5 indicates inelastic supply.

Question 19

At a price of $1.20,a local coffee shop is willing to supply 100 cinnamon rolls per day.At a price of $1.40,the coffee shop would be willing to supply 150 cinnamon rolls per day.Using the midpoint method,the price elasticity of supply is about

Accepted Answer

Using the midpoint method:

% change in quantity supplied = [(150-100)/((150+100)/2)] x 100% = 33.33%
% change in price = [(1.40-1.20)/((1.20+1.40)/2)] x 100% = 16.67%

Price elasticity of supply = % change in quantity supplied / % change in price
= 33.33% / 16.67%
= 2

Therefore, the price elasticity of supply is 2.60.

Question 20

On a certain supply curve,one point is (quantity supplied = 200,price = $4.00)and another point is (quantity supplied = 250,price = $4.50).Using the midpoint method,the price elasticity of supply is about

Accepted Answer