Question 1

The elasticity of supply for airplane travel one year in advance of the departure date is most likely to be
A)substantially lower than -1.
B)between -1 and zero.
C)between zero and 1.
D)around 1.
E)substantially greater than 1.

Accepted Answer

The elasticity of supply for airplane travel one year in advance is likely to be substantially greater than 1 because airlines have the flexibility to adjust the number of flights and seats available over such a long time horizon, making supply highly responsive to changes in price.

Question 2

Long-run supply is
A)more elastic than momentary supply but less elastic than short-run supply.
B)less elastic than momentary supply but more elastic than short-run supply.
C)less elastic than both momentary and short-run supply.
D)more elastic than both momentary and short-run supply.
E)equal in elasticity to short-run supply.

Accepted Answer

Long-run supply is more elastic compared to both momentary and short-run supply because firms can adjust all their factors of production in the long run, making it easier to respond to changes in price.

Question 3

When price rises from $1.50 to $2.50, quantity supplied increases from 9,000 to 11,000 units. What is the price elasticity of supply?
A)0.4
B)0.8
C)2.5
D)4.0
E)-0.4

Accepted Answer

The answer of When price rises from $1.50 to $2.50,...

Question 4

If a rise in the price of good A from $9 to $11 results in an increase from 9,500 to 10,500 units supplied, then
A)supply is elastic.
B)supply is inelastic.
C)supply is unit elastic.
D)demand is elastic.
E)supply is perfectly inelastic.

Accepted Answer

The answer of If a rise in the price of...

Question 5

If a 10 percent increase in price results in an 18 percent increase in quantity supplied, the elasticity of supply is
A)0.3.
B)0.6.
C)1.2.
D)1.8.
E)9.0.

Accepted Answer

The elasticity of supply is calculated as the percentage change in quantity supplied divided by the percentage change in price. Here, it is 18% / 10% = 1.8.

Question 6

Suppose the price of a television set rises by 10 percent. Which one of the following would we expect to be the most elastic following such a price change?
A)the momentary supply of television sets
B)the short-run supply of television sets
C)the long-run supply of television sets
D)the momentary demand for television sets
E)the normal demand for television sets

Accepted Answer

In the long run, producers have more time to adjust their production levels and potentially switch to producing different goods, making the supply more elastic. The momentary supply refers to the supply in the very short term, where producers may not be able to adjust their production levels yet, and the short-run supply refers to a period where producers have some time to adjust but not as much as the long run. The momentary demand and normal demand for television sets are not likely to be as affected by a 10 percent price increase as the supply side, so they are not the best choice.

Question 7

A vertical supply curve
A)is impossible except in the long run.
B)implies an elasticity of supply equal to zero.
C)implies an elasticity of supply equal to infinity.
D)indicates that suppliers are unwilling to produce the good.
E)indicates a shortage of the good.

Accepted Answer

A vertical supply curve implies that no matter the change in price, the quantity supplied remains the same. This suggests that the elasticity of supply is zero, meaning that suppliers are unable or unwilling to increase their supply of the good or service.

Question 8

The elasticity of supply for airplane travel one day in advance of the departure date is most likely to be
A)substantially lower than -1.
B)between -1 and zero.
C)between zero and 1.
D)around 1.
E)substantially greater than 1.

Accepted Answer

The elasticity of supply for airplane travel one day in advance of the departure date is likely to be between zero and 1 because in the short run, airlines can only adjust the number of flights by a limited amount, so the quantity supplied is not very responsive to changes in price. Additionally, airlines cannot easily add new airplanes to their fleet or expand their capacity in the short term, so the supply curve is relatively inelastic.

Question 9

If a 10 percent increase in price results in a 9 percent increase in quantity supplied,
A)the good is a normal good.
B)the good is an inferior good.
C)supply is unit elastic.
D)supply is inelastic.
E)supply is elastic.

Accepted Answer

A 10 percent increase in price resulting in only a 9 percent increase in quantity supplied indicates that the percentage change in quantity supplied is less than the percentage change in price. This indicates a relatively inelastic supply curve.

Question 10

A horizontal supply curve
A)is impossible except in the long run.
B)implies an elasticity of supply equal to zero.
C)implies an elasticity of supply equal to infinity.
D)indicates that suppliers are unwilling to produce the good.
E)indicates there is a fixed quantity of the good that can be supplied.

Accepted Answer

A horizontal supply curve implies that the elasticity of supply is equal to infinity, meaning suppliers are willing to supply any quantity at a given price.

Question 11

If a large percentage fall in the price of good A results in a small percentage decrease in the quantity supplied, then
A)demand is elastic.
B)demand is inelastic.
C)demand is income inelastic.
D)supply is inelastic.
E)supply is elastic.

Accepted Answer

The scenario describes a situation where a significant price drop leads to only a minor reduction in the quantity supplied, indicating that the supply of good A is inelastic. This means producers are not able to, or willing to, significantly change the quantity they supply in response to price changes.

Question 12

A sudden, end-of-summer heat wave increases the demand for air conditioners and catches suppliers with no reserve inventories. The momentary supply for air conditioners is
A)perfectly elastic.
B)perfectly inelastic.
C)elastic.
D)shown by an upward-sloping curve.
E)shown by a horizontal curve.

Accepted Answer

The momentary supply for air conditioners is perfectly inelastic because suppliers have no reserve inventories, meaning they cannot increase supply in response to the increased demand.

Question 13

If a rise in the price of good A from $9 to $11 results in an increase in quantity supplied from 4,000 to 6,000 units, the elasticity of supply is
A)0.5.
B)0.8.
C)1.0.
D)2.0.
E)20.0.

Accepted Answer

The price elasticity of supply is calculated as the percentage change in quantity supplied divided by the percentage change in price. The percentage change in quantity supplied is ((6000-4000)/4000) = 0.5 or 50%, and the percentage change in price is ((11-9)/9) = 0.222 or 22.2%. Thus, the elasticity of supply is 0.5/0.222 = 2.25, which is closest to 2.0.

Question 14

If a rise in the price of good A from $100 to $120 results in an increase in quantity supplied from 10,000 to 12,000 units, then the elasticity of supply is
A)0.625.
B)0.8.
C)1.25.
D)0.2.
E)1.0.

Accepted Answer

The answer of If a rise in the price of...

Question 15

Short-run supply is
A)more elastic than momentary supply but less elastic than long-run supply.
B)less elastic than momentary supply but more elastic than long-run supply.
C)less elastic than both momentary and long-run supply.
D)more elastic than both momentary and long-run supply.
E)as elastic as either the momentary or the long-run supply.

Accepted Answer

In the short run, firms can adjust some but not all inputs, making supply more elastic than in the momentary period where no adjustments can be made, but less elastic than in the long run where all inputs can be adjusted.

Question 16

Preferences for brussels sprouts increase. The price of brussels sprouts will not change if the price elasticity of
A)demand is 0.
B)demand is 1.
C)supply is 0.
D)supply is 1.
E)supply is infinity.

Accepted Answer

The answer of Preferences for brussels sprouts increase. The price...

Question 17

Supply is inelastic if
A)a small percentage change in price results in a large percentage change in quantity supplied.
B)a large percentage change in price results in a small percentage change in quantity supplied.
C)the good is a normal good.
D)the good is an inferior good.
E)the good has many substitutes.

Accepted Answer

Inelastic supply occurs when a large change in price results in a relatively small change in the quantity supplied. This indicates that producers are unable to easily adjust their production levels in response to changes in price.

Question 18

You are told that a 5 percent increase in the price of a good increases the quantity supplied by 10 percent after one month. Supply of this good is ________. This good is most likely produced using productive resources that are ________.
A)inelastic; plentiful or easily obtained
B)decreasing; unique or rare
C)elastic; plentiful or easily obtained
D)unit elastic; unique or rare
E)elastic; unique or rare

Accepted Answer

The fact that a 5 percent increase in price leads to a 10 percent increase in quantity supplied indicates a relatively elastic supply curve. This means that producers are able to increase their output significantly in response to a price increase. The use of plentiful or easily obtained productive resources would further suggest a more elastic supply curve, as producers would be able to respond quickly and easily to changes in price. Therefore, the correct answer is C: elastic; plentiful or easily obtained.

Question 19

Use the figure below to answer the following question.
  
Figure 4.3.1
-The two supply curves in Figure 4.3.1 are parallel. Between $7 to $8,
A)S₁ is more elastic than S₂.
B)S₁ is more inelastic than S₂.
C)S₁ and S₂ have the same elasticity.
D)S₁ is steeper than S₂.
E)S₁ is flatter than S₂.

Accepted Answer

The answer of Use the figure below to answer the...

Question 20

Goods that can be produced using rare productive resources have a ________ elasticity of supply. The greater the amount of time available after a price change, the ________ is the elasticity of supply.
A)low; smaller
B)high; greater
C)high; smaller
D)low; greater
E)high; more inelastic

Accepted Answer

Goods that require rare productive resources tend to have a low elasticity of supply because it's difficult to increase production quickly or substantially. The more time producers have to adjust to a price change, the greater the elasticity of supply becomes, as they can find more resources, improve technology, or increase capacity.

Quiz 4: Elasticity

The elasticity of supply for airplane travel one year in advance of the departure date is most likely to be

Long-run supply is

When price rises from $1.50 to $2.50, quantity supplied increases from 9,000 to 11,000 units. What is the price elasticity of supply?

If a rise in the price of good A from $9 to $11 results in an increase from 9,500 to 10,500 units supplied, then

If a 10 percent increase in price results in an 18 percent increase in quantity supplied, the elasticity of supply is

Suppose the price of a television set rises by 10 percent. Which one of the following would we expect to be the most elastic following such a price change?

A vertical supply curve

The elasticity of supply for airplane travel one day in advance of the departure date is most likely to be

If a 10 percent increase in price results in a 9 percent increase in quantity supplied,

A horizontal supply curve

If a large percentage fall in the price of good A results in a small percentage decrease in the quantity supplied, then

A sudden, end-of-summer heat wave increases the demand for air conditioners and catches suppliers with no reserve inventories. The momentary supply for air conditioners is

If a rise in the price of good A from $9 to $11 results in an increase in quantity supplied from 4,000 to 6,000 units, the elasticity of supply is

If a rise in the price of good A from $100 to $120 results in an increase in quantity supplied from 10,000 to 12,000 units, then the elasticity of supply is

Short-run supply is

Preferences for brussels sprouts increase. The price of brussels sprouts will not change if the price elasticity of

Supply is inelastic if

You are told that a 5 percent increase in the price of a good increases the quantity supplied by 10 percent after one month. Supply of this good is . This good is most likely produced using productive resources that are .

Use the figure below to answer the following question. Figure 4.3.1 -The two supply curves in Figure 4.3.1 are parallel. Between $7 to $8,

Goods that can be produced using rare productive resources have a elasticity of supply. The greater the amount of time available after a price change, the is the elasticity of supply.