Question 1

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

The rapidly increasing opportunity cost of producing additional units is a characteristic of a product with limited resources, where as we produce more units, input costs tend to increase, so supply is price inelastic. Demand elasticity does not depend on opportunity cost, but rather on how sensitive consumers are to changes in price. Therefore, A, C, and E are not correct choices.

Question 2

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. This is because the amount of beach front property available on the island is limited, meaning that even if the price of the property were to increase, it is unlikely to substantially impact the amount of property that is supplied. In other words, there are few good substitutes for beach front property on the island. As a result, the supply of this type of property is likely to be relatively unresponsive to changes in price.

Question 3

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

The price elasticity of supply measures the responsiveness of quantity supplied to a change in price. A value of 10 indicates that supply is very responsive to changes in price, meaning a small change in price will lead to a relatively large change in quantity supplied. This is characteristic of elastic supply.

Question 4

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 means that the percentage change in the quantity supplied is equal to the percentage change in price. Therefore, option C is the correct choice. Option A, B, D and E do not accurately describe unit elasticity of supply.

Question 5

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 6

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

When a 20% increase in price does not lead to any change in quantity supplied, it indicates that the supply is completely unresponsive to price changes, meaning the supply curve is vertical. This is called perfect inelasticity.

Question 7

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

If the price doubles and the quantity supplied also doubles, it means that the percentage change in quantity supplied is equal to the percentage change in price. Therefore, the price elasticity of supply is equal to 1 (unit elastic).

Question 8

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 price = (new price - old price) / [(new price + old price) / 2] x 100% 
% change in price = (6 - 9) / [(6 + 9) / 2] x 100% 
% change in price = -3 / 7.5 x 100% 
% change in price = -40%

% change in quantity supplied = (new quantity supplied - old quantity supplied) / [(new quantity supplied + old quantity supplied) / 2] x 100% 
% change in quantity supplied = (1,300 - 1,500) / [(1,300 + 1,500) / 2] x 100% 
% change in quantity supplied = -200 / 1,400 x 100% 
% change in quantity supplied = -14.3%

Elasticity of supply = % change in quantity supplied / % change in price 
Elasticity of supply = (-14.3%) / (-40%) 
Elasticity of supply = 0.357

Rounding to two decimals, the elasticity of supply is 0.36, which corresponds to choice C.

Question 9

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

Over time, producers can adjust their production processes and resources in response to price changes, making supply more elastic. This is because they have more time to find alternatives, adjust production levels, or innovate, thereby responding more effectively to price changes.

Question 10

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

Using the midpoint method, we have:
Price elasticity of supply = (ΔQ/[(Q1+Q2)/2])/(ΔP/[(P1+P2)/2])
= ((40-30)/[(30+40)/2])/((45-35)/[(35+45)/2])
= (10/35)/ (10/40)
= 1.14
Therefore, the price elasticity of supply is 1.14, which means that a 1% change in price results in a 1.14% change in quantity supplied.

Question 11

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 quantity of textbooks supplied has increased in response to a price increase, indicating that the supply is responsive to changes in price. Additionally, the percentage change in quantity supplied (22.22%) is greater than the percentage change in price (10.53%), further indicating that the supply is elastic.

Question 12

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, as the producers are able to increase production without significant increase in cost.

Question 13

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, effectively increasing from its initial state.

Question 14

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

Using the midpoint method, we can calculate the percentage change in quantity supplied and the percentage change in price as follows:

Percentage change in quantity supplied = ((200-100)/((200+100)/2)) x 100% = 66.67%

Percentage change in price = ((50-40)/((50+40)/2)) x 100% = 22.22%

Price elasticity of supply = (Percentage change in quantity supplied) / (Percentage change in price) = 66.67% / 22.22% = 3.00

Therefore, the price elasticity of supply is 3.00, which corresponds to choice C.

Question 15

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 (PES) of 0.35 indicates that a 1% increase in price would result in only a 0.35% increase in the quantity supplied of jumbo jets. This means that the supply of jumbo jets is relatively unresponsive to changes in price, making it inelastic.

Question 16

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

According to the given information, the coefficient of price elasticity of supply (PES) is greater than 1. This indicates that the quantity supplied is relatively more responsive to changes in price, which means that supply is elastic.

Question 17

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 change regardless of changes in price. This means that the supply curve will be a vertical line, with the quantity supplied staying constant even when the price changes.

Question 18

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

Price elasticity of supply is the percentage change in the quantity supplied divided by the percentage change in price. This shows the responsiveness of suppliers to changes in the market price of a good or service.

Question 19

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 how much the quantity supplied of a good changes in response to a change in price. Therefore, the correct answer is D, as it refers to a change in price, which is directly related to the price elasticity of supply.

Question 20

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

If the quantity supplied and the price change by the same percentage, this means that the elasticity of supply is equal to 1 or unit elastic. This indicates that the percentage change in quantity supplied is equal to the percentage change in price.

Quiz 5: Elasticities of Demand and Supply

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

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

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

Supply is unit elastic when 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 20 percent increase in the price of a good does not change the quantity supplied,the

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

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

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 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

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.

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

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

When supply is perfectly inelastic,the supply curve is

The price elasticity of supply equals the percentage change in the

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

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