Tag: elasticity of supply

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Multiple choice economics theory of supply elasticity of supply supply - law of supply and price elasticity of supply law of supply and elasticity of supply

Supply is likely to be more price elastic ________,

  1. in the short run rather than the long run

  2. if factors of production are relatively immobile between industries

  3. if there are very few producers

  4. if it is easy to expand output
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Supply is more elastic when producers can easily adjust their output in response to price changes. If it is easy to expand output, the producer has more flexibility.

Multiple choice economics theory of supply elasticity of supply supply - law of supply and price elasticity of supply law of supply and elasticity of supply

Percent increase in the price of sugar reduces sugar consumption by about 5 percent. The increase causes households to _____________.

  1. spend more on sugar

  2. spend less on sugar

  3. spend the same amount on sugar

  4. consume more goods like coffee and tea that are complements of sugar
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

If a price increase (e.g., 10%) reduces consumption by a smaller percentage (5%), the demand is inelastic. Total expenditure (Price * Quantity) will increase because the price effect outweighs the quantity effect.

Multiple choice economics theory of supply elasticity of supply supply - law of supply and price elasticity of supply law of supply and elasticity of supply

Which one of the following labour resources will likely have the most inelastic supply schedule in the short run?

  1. Filling station attendants

  2. Sales clerks

  3. Construction labourers

  4. Dentist
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Supply of labour is inelastic when it requires long periods of specialized training or education. A dentist requires many years of education, making the supply of dentists very inelastic in the short run compared to unskilled labour.

Multiple choice economics theory of supply elasticity of supply supply - law of supply and price elasticity of supply law of supply and elasticity of supply

 When the greater the elasticity of supply, the change in the new equilibrium price will _____________.

  1. be higher

  2. be higher than previous price

  3. be lower

  4. be lower than previous price
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

When supply is highly elastic, a change in demand results in a smaller change in price because the quantity supplied adjusts significantly to absorb the shock.

Multiple choice economics theory of supply elasticity of supply supply - law of supply and price elasticity of supply law of supply and elasticity of supply

The _________ refers to the amount of a certain good producers are willing to supply when receiving a certain price.

  1. quantity demanded

  2. quantity purchased

  3. quantity supplied

  4. quantity sold
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Quantity supplied is defined as the specific amount of a good that producers are willing and able to sell at a specific price during a given period.

Multiple choice economics theory of supply elasticity of supply supply - law of supply and price elasticity of supply law of supply and elasticity of supply

Usually, the demand for commodities, the consumption of which can be postponed, has an _________ demand as the prices rise and expected to fall again.

  1. elastic

  2. inelastic

  3. unitary

  4. All of above
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

If consumption can be postponed, consumers are more sensitive to price changes (they will wait for prices to fall), making the demand elastic.

Multiple choice economics theory of supply elasticity of supply supply - law of supply and price elasticity of supply law of supply and elasticity of supply

The supply is said to be __________, when any change in price produces no change in the quantity supplied of a commodity.

  1. relatively more elastic

  2. perfectly elastic

  3. perfectly inelastic

  4. relatively Inelastic
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Perfectly inelastic supply means the quantity supplied does not change at all regardless of price changes, resulting in a vertical supply curve.

Multiple choice economics theory of supply elasticity of supply supply - law of supply and price elasticity of supply law of supply and elasticity of supply

The supply is ___________, when a small change in price causes a greater change in quantity supplied.

  1. relatively more elastic

  2. perfectly elastic

  3. perfectly inelastic

  4. relatively Inelastic
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

When a small change in price leads to a larger percentage change in quantity supplied, the supply is relatively more elastic (elasticity > 1).

Multiple choice economics theory of supply elasticity of supply supply - law of supply and price elasticity of supply law of supply and elasticity of supply

The formula for calculating price elasticity of supply is ________________.

  1. $\displaystyle E _s = \frac{percentage \,\, change \,\, in \,\, price}{percentage \,\, change\,\, in \,\, quantity\,\, demanded}$
  2. $\displaystyle E _s = \frac{percentage \,\, change \,\, in \,\, quantity\,\, demanded }{percentage \,\, change\,\, in \,\, quantity\,\, supplied}$
  3. $\displaystyle E _s = \frac{percentage \,\, change\,\, in \,\, quantity\,\, supplied }{percentage \,\, change\,\, in \,\, price}$
  4. $\displaystyle E _s = \frac{ percentage \,\, change \,\, in \,\, quantity \,\, demanded }{percentage \,\, change\,\, in \,\, price}$
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Price elasticity of supply is defined as the ratio of the percentage change in quantity supplied to the percentage change in price.

Multiple choice economics theory of supply elasticity of supply supply - law of supply and price elasticity of supply law of supply and elasticity of supply

The supply is said to be ____________, when a very insignificant change in price leads to an infinite change in quantity supplied.

  1. relatively more elastic

  2. perfectly elastic

  3. perfectly inelastic

  4. relatively Inelastic
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Perfectly elastic supply occurs when an infinitesimal change in price results in an infinite change in quantity supplied, represented by a horizontal supply curve.