Question 1

Suppose the value of the price elasticity of supply is 4.What does this mean?
A)A 4 percent increase in the price of the good causes quantity supplied to increase by 1 percent.
B)A 1 percent increase in the price of the good causes the supply curve to shift upward by 4 percent.
C)A 1 percent increase in the price of the good causes quantity supplied to increase by 4 percent.
D)For every $1 increase in price,quantity supplied increases by 4 units.

Accepted Answer

A price elasticity of supply of 4 means that a 1 percent increase in the price of the good will cause quantity supplied to increase by 4 percent. This indicates that the supply of the good is highly responsive to changes in price.

Question 2

The price elasticity of an upward-sloping supply curve is always
A)positive.
B)negative.
C)greater than one.
D)impossible to determine.

Accepted Answer

The price elasticity of a supply curve measures the responsiveness of quantity supplied to changes in price. An upward-sloping supply curve indicates that at higher prices, producers are willing to supply more goods. Therefore, the relationship between price and quantity supplied is positive. As a result, the price elasticity of an upward-sloping supply curve is always positive.

Question 3

Suppose the price elasticity of demand for methamphetamine is -0.35.If decriminalization caused the price of methamphetamine to fall by 75 percent,what will be the percentage increase in the quantity of methamphetamine demanded? If the price elasticity is -3.5,what will be the percentage increase in quantity demanded?

Accepted Answer

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

Question 4

Figure 6-10 
-Refer to Figure 6-10.A perfectly elastic supply curve is shown in
A)Panel A.
B)Panel B.
C)Panel C.
D)Panel D.

Accepted Answer

The answer of Figure 6-10 
-Refer to Figure 6-10.A perfectly...

Question 5

If firms do not increase their quantity supplied when price changes,then supply is
A)perfectly elastic.
B)perfectly inelastic.
C)relatively inelastic.
D)elastic.

Accepted Answer

When firms do not increase their quantity supplied when price changes, supply is considered perfectly inelastic. This means that the quantity supplied remains the same regardless of a change in price.

Question 6

If,for a given percentage increase in price,quantity supplied increases by a proportionately larger percentage,then supply is
A)unit elastic.
B)perfectly elastic.
C)relatively inelastic.
D)elastic.

Accepted Answer

If quantity supplied increases by a proportionately larger percentage than the percentage increase in price, then supply is elastic. This means that suppliers are responsive to changes in price and are able to quickly adjust their production to meet the changes in demand.

Question 7

If,for a given percentage decrease in price,quantity supplied decreases by a proportionately smaller percentage,then supply is
A)unit elastic.
B)perfectly elastic.
C)relatively inelastic.
D)elastic.

Accepted Answer

When the percentage decrease in price is greater than the proportionate decrease in quantity supplied, supply is relatively inelastic. This means that the change in price has a smaller impact on the quantity supplied.

Question 8

Price elasticity of supply is used to gauge
A)how responsive suppliers are to price changes.
B)how responsive suppliers are to changes in future prices.
C)how responsive suppliers are to a change in demand.
D)how responsive sales are to a change in input prices.

Accepted Answer

Price elasticity of supply measures the degree of responsiveness of quantity supplied to changes in price, indicating how easily suppliers can adjust their production levels in response to fluctuations in market conditions. It does not measure the response of suppliers to changes in future prices or changes in demand, nor does it measure the response of sales to changes in input prices.

Question 9

Suppose a 4 percent increase in price results in a 2 percent increase in the quantity supplied of a good.Calculate the price elasticity of supply and characterize the product.
A)2;The product is elastic.
B)0.2;The product is inelastic.
C)0.5;The product is inelastic.
D)50%;The product is inelastic.

Accepted Answer

Price elasticity of supply = (% change in quantity supplied) / (% change in price)
Given, % change in price = 4%
% change in quantity supplied = 2%
Putting these values in the formula, we get:
Price elasticity of supply = 2% / 4% = 0.5
Since the elasticity is less than 1, the product is inelastic.

Question 10

An increase in the demand for green tea raises the price of green tea from $16 a pound to $20 a pound.As a result,quantity supplied increases by 30 percent.Using the midpoint formula,what is the value of the price elasticity of supply?
A)1.35
B)1.875
C)2.22
D)7.5

Accepted Answer

The answer of An increase in the demand for green...

Question 11

Figure 6-10 
-Refer to Figure 6-10.A unit-elastic supply curve is shown in
A)Panel A.
B)Panel B.
C)Panel C.
D)Panel D.

Accepted Answer

The answer of Figure 6-10 
-Refer to Figure 6-10.A unit-elastic...

Question 12

Figure 6-10 
-Refer to Figure 6-10.A perfectly inelastic supply curve is shown in
A)Panel A.
B)Panel B.
C)Panel C.
D)Panel D.

Accepted Answer

The answer of Figure 6-10 
-Refer to Figure 6-10.A perfectly...

Question 13

Figure 6-11 
-Refer to Figure 6-11.What is the value of the price elasticity of supply between g and h?
A)20 percent
B)0.5
C)2
D)0.02

Accepted Answer

Price elasticity of supply = percentage change in quantity supplied / percentage change in price. Moving from point g to point h, the quantity supplied increases from 12 to 24 (100% increase) while the price increases from $10 to $20 (100% increase). Therefore, the price elasticity of supply between g and h is 100% / 50% = 2.

Question 14

Suppose that the price of a money clip increases from $0.75 to $0.90 and quantity supplied rises from 8,000 units to 10,000 units.Use the midpoint formula to calculate the price elasticity of supply.
A)1.22
B)1.0
C)0.82
D)0.07

Accepted Answer

The answer of Suppose that the price of a money...

Question 15

A study of the effects of the minimum wage on employment of low-skilled workers estimated the price elasticity of demand for low-skilled workers is -0.75.Suppose that the government is considering raising the minimum wage from $7.25 per hour to $7.75 per hour.Based on this information,calculate the percentage change in the employment of low skilled workers.Use the midpoint formula.

Accepted Answer

The answer of A study of the effects of the...

Question 16

The price elasticity of supply for umbrellas is 2.Suppose you're told that following a price increase,quantity supplied increased by 30 percent.What was the percentage change in price that brought this about?
A)60 percent
B)15 percent
C)6.7 percent
D)impossible to determine without additional information

Accepted Answer

Using the formula for price elasticity of supply:
% change in quantity supplied = price elasticity of supply * % change in price
We know that price elasticity of supply = 2 and the % change in quantity supplied = 30%.
Therefore, 
30% = 2 * % change in price
% change in price = 15%

Question 17

Figure 6-10 
-Refer to Figure 6-10.The supply curve on which price elasticity changes at every point is shown in
A)Panel A.
B)Panel B.
C)Panel C.
D)Panel D.

Accepted Answer

The answer of Figure 6-10 
-Refer to Figure 6-10.The supply...

Question 18

The price elasticity of supply is equal to
A)the value of the slope of the supply curve.
B)the change in quantity supplied divided by the change in price.
C)the percentage change in price divided by the percentage change in quantity supplied.
D)the percentage change in quantity supplied divided by the percentage change in price.

Accepted Answer

The price elasticity of supply is measured as the percentage change in quantity supplied divided by the percentage change in price. This is because supply is a function of the cost of production and the willingness of producers to produce, so a change in price will lead to a proportional change in quantity supplied. Therefore, the correct option is D, which states that the price elasticity of supply is the percentage change in quantity supplied divided by the percentage change in price.

Question 19

The price elasticity of the supply of teenage labor services is approximately 1.36.Suppose the minimum wage rises from $7.25 per hour to $8.75.Using the midpoint formula,what is the approximate change in the quantity of teenage labor supplied?
A)7.3 percent
B)14.4 percent
C)25.5 percent
D)There is insufficient information to answer the question.

Accepted Answer

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

Question 20

Suppose the price elasticity of demand for cigarettes is -0.4.The FDA decides to regulate tobacco production,which increases the price of cigarettes and causes the quantity of cigarettes demanded to decrease by 25 percent.What is the percentage increase in price which would lead to the 25 percent decrease in quantity demanded? If the price elasticity was -4,what would be the percentage increase in price?

Accepted Answer

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

Quiz 6: Elasticity: the Responsiveness of Demand and Supply

Suppose the value of the price elasticity of supply is 4.What does this mean?

The price elasticity of an upward-sloping supply curve is always

Figure 6-10 -Refer to Figure 6-10.A perfectly elastic supply curve is shown in

If firms do not increase their quantity supplied when price changes,then supply is

If,for a given percentage increase in price,quantity supplied increases by a proportionately larger percentage,then supply is

If,for a given percentage decrease in price,quantity supplied decreases by a proportionately smaller percentage,then supply is

Price elasticity of supply is used to gauge

Suppose a 4 percent increase in price results in a 2 percent increase in the quantity supplied of a good.Calculate the price elasticity of supply and characterize the product.

An increase in the demand for green tea raises the price of green tea from $16 a pound to $20 a pound.As a result,quantity supplied increases by 30 percent.Using the midpoint formula,what is the value of the price elasticity of supply?

Figure 6-10 -Refer to Figure 6-10.A unit-elastic supply curve is shown in

Figure 6-10 -Refer to Figure 6-10.A perfectly inelastic supply curve is shown in

Figure 6-11 -Refer to Figure 6-11.What is the value of the price elasticity of supply between g and h?

Suppose that the price of a money clip increases from $0.75 to $0.90 and quantity supplied rises from 8,000 units to 10,000 units.Use the midpoint formula to calculate the price elasticity of supply.

The price elasticity of supply for umbrellas is 2.Suppose you're told that following a price increase,quantity supplied increased by 30 percent.What was the percentage change in price that brought this about?

Figure 6-10 -Refer to Figure 6-10.The supply curve on which price elasticity changes at every point is shown in

The price elasticity of supply is equal to

The price elasticity of the supply of teenage labor services is approximately 1.36.Suppose the minimum wage rises from $7.25 per hour to $8.75.Using the midpoint formula,what is the approximate change in the quantity of teenage labor supplied?