Question 1

Why is time such an important determinant in the elasticity of supply? Is time also important in determining price elasticity of demand? Explain.

Accepted Answer

The answer of Why is time such an important determinant...

Question 2

Why is the price elasticity of supply greater if there is more time for adjustment to an increase in the price of an item?

Accepted Answer

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

Question 3

Tickets for the Super Bowl are an example of supply that is
A) perfectly elastic.
B) unit elastic.
C) slightly inelastic.
D) perfectly inelastic.

Accepted Answer

Super Bowl tickets are an example of a perfectly inelastic supply because the number of tickets available is fixed and does not change regardless of the price.

Question 4

If the price of hamburger meat increases by 20 percent and the quantity supplied by meat packing companies increases by 30 percent, what is the price elasticity of supply?
A) 1.65
B) 1.20
C) 0.67
D) 1.50

Accepted Answer

Price elasticity of supply is calculated as the percentage change in quantity supplied divided by the percentage change in price. Here, it is 30% / 20% = 1.50.

Question 5

The longer the time period that suppliers have to adjust to price changes, the
A) greater will be the price elasticity of supply.
B) lower will be the price elasticity of supply.
C) lower will be the price elasticity of demand.
D) greater will be the price elasticity of demand.

Accepted Answer

The longer the time period suppliers have to adjust to price changes, the more they can alter production levels, leading to a greater price elasticity of supply.

Question 6

If the price elasticity of supply is equal to 1, we would say the supply of the item is
A) unit elastic.
B) inelastic.
C) elastic.
D) perfectly elastic.

Accepted Answer

A price elasticity of supply equal to 1 means that the percentage change in quantity supplied is exactly equal to the percentage change in price. This indicates that the supply of the item is unit elastic, meaning that the change in price has an equivalent impact on the quantity supplied.

Question 7

Vincent Van Gogh paintings have a price elasticity of supply
A) equal to 2.0.
B) equal to 1.0.
C) close to 0.0.
D) approaching infinity.

Accepted Answer

The price elasticity of supply measures the responsiveness of the quantity supplied to a change in price. Van Gogh paintings are unique works of art that cannot be easily replicated, so their supply is limited. This means that the price elasticity of supply is close to 0.0, indicating that a change in price will have little effect on the quantity supplied. In other words, whether the price of a Van Gogh painting goes up or down, there will likely be a limited change in the number of paintings available for purchase.

Question 8

For most items, we find the price elasticity of supply will be
A) negative.
B) positive.
C) invisible.
D) inverse.

Accepted Answer

Price elasticity of supply measures the responsiveness of supply to a change in price. Typically, if the producer can respond quickly to price changes, the supply will be more elastic, meaning that the quantity supplied will change significantly in response to price. Therefore, the price elasticity of supply is generally positive.

Question 9

The price elasticity of supply is 0.6. This means that
A) a $10 increase in price would increase quantity supplied by 60.
B) a 150 percent increase in price would increase quantity supplied by 90 percent.
C) a 50 percent increase in quantity will occur when price increases by 30 percent.
D) a 10 percent increase in quantity will occur when price increases by 6 percent.

Accepted Answer

Price elasticity of supply is calculated as the percentage change in quantity supplied divided by the percentage change in price. An elasticity of 0.6 means that for a 150% increase in price, the quantity supplied would increase by 0.6 * 150% = 90%.

Question 10

Which of the following statements is correct?
A) Supply is more elastic in the short run than in long run.
B) Supply is more elastic in the long run than in short run.
C) Price elasticity of supply is constant along the supply curve.
D) Price elasticity of supply is always a negative number.

Accepted Answer

In the short run, firms may not have enough time to adjust their production levels, so supply is less elastic. In the long run, firms can adjust their production levels and therefore supply is more elastic.

Answer: C 
 Price elasticity of supply may vary along the supply curve as different points on the curve may have different levels of responsiveness to price changes.

Question 11

A supply curve that is parallel to the quantity axis is
A) perfectly elastic.
B) perfectly inelastic.
C) relatively inelastic.
D) unitary elastic.

Accepted Answer

The answer of A supply curve that is parallel to...

Question 12

If price elasticity of supply is less than 1,
A) supply is elastic.
B) demand is elastic.
C) demand is inelastic.
D) supply is inelastic.

Accepted Answer

Price elasticity of supply less than 1 indicates that a change in price results in a proportionally smaller change in quantity supplied, meaning that supply is inelastic.

Question 13

A supply curve that is parallel to the price axis is
A) perfectly elastic.
B) perfectly inelastic.
C) relatively inelastic.
D) unitary elastic.

Accepted Answer

A supply curve that is parallel to the price axis means that no matter how much the price changes, the quantity supplied remains constant. This is the definition of perfect inelasticity. Thus, the correct answer is B, perfectly inelastic.

Quiz 19: Demand and Supply Elasticity

Why is time such an important determinant in the elasticity of supply? Is time also important in determining price elasticity of demand? Explain.

Why is the price elasticity of supply greater if there is more time for adjustment to an increase in the price of an item?

Tickets for the Super Bowl are an example of supply that is

If the price of hamburger meat increases by 20 percent and the quantity supplied by meat packing companies increases by 30 percent, what is the price elasticity of supply?

The longer the time period that suppliers have to adjust to price changes, the

If the price elasticity of supply is equal to 1, we would say the supply of the item is

Vincent Van Gogh paintings have a price elasticity of supply

For most items, we find the price elasticity of supply will be

The price elasticity of supply is 0.6. This means that

Which of the following statements is correct?

A supply curve that is parallel to the quantity axis is

If price elasticity of supply is less than 1,

A supply curve that is parallel to the price axis is