Deck 5: 2: Sec 52 Mc the Elasticity of Supply

Question 1

The supply of a good will be more elastic,the

A)more the good is considered a luxury.
B)broader is the definition of the market for the good.
C)larger the number of close substitutes for the good.
D)longer the time period being considered.

Answer 1

C

Question 2

Frequently,in the short run,the quantity supplied of a good is

A)impossible,or nearly impossible,to measure.
B)not very responsive to price changes.
C)determined by the quantity demanded of the good.
D)determined by psychological forces and other non-economic forces.

Answer 2

B

Question 3

If the quantity supplied responds only slightly to changes in price,then

A)supply is said to be elastic.
B)supply is said to be inelastic.
C)an increase in price will not shift the supply curve very much.
D)even a large decrease in demand will change the equilibrium price only slightly.

Answer 3

B

Question 4

When a supply curve is relatively flat,the

A)sellers are not at all responsive to a change in price.
B)equilibrium price changes substantially when the demand for the good changes.
C)supply is relatively elastic.
D)supply is relatively inelastic.

Question 5

The price elasticity of supply measures how responsive

A)equilibrium price is to equilibrium quantity.
B)sellers are to a change in buyers' income.
C)sellers are to a change in price.
D)consumers are to the number of substitutes.

Question 6

The price elasticity of supply measures how much

A)the quantity supplied responds to changes in input prices.
B)the quantity supplied responds to changes in the price of the good.
C)the price of the good responds to changes in supply.
D)sellers respond to changes in technology.

Question 7

A key determinant of the price elasticity of supply is the

A)number of close substitutes for the good in question.
B)extent to which buyers alter their quantities demanded in response to changes in prices.
C)length of the time period.
D)extent to which buyers alter their quantities demanded in response to changes in their incomes.

Question 8

The price elasticity of supply measures how responsive

A)sellers are to a change in price.
B)sellers are to a change in buyers' income.
C)buyers are to a change in production costs.
D)equilibrium price is to a change in supply.

Question 9

A linear,upward-sloping supply curve has

A)a constant slope and a changing price elasticity of supply.
B)a changing slope and a constant price elasticity of supply.
C)both a constant slope and a constant price elasticity of supply.
D)both a changing slope and a changing price elasticity of supply.

Question 10

A key determinant of the price elasticity of supply is

A)the ability of sellers to change the price of the good they produce.
B)the ability of sellers to change the amount of the good they produce.
C)how responsive buyers are to changes in sellers' prices.
D)the slope of the demand curve.

Question 11

If the price elasticity of supply for wheat is less than 1,then the supply of wheat is

A)inelastic.
B)elastic.
C)unit elastic.
D)quite sensitive to changes in income.

Question 12

When a supply curve is relatively flat,

A)sellers are not very responsive to changes in price.
B)supply is relatively inelastic.
C)supply is relatively elastic.
D)Both a and b are correct.

Question 13

The price elasticity of supply along a typical supply curve is

A)constant.
B)equal to zero.
C)higher at low levels of quantity supplied and lower at high levels of quantity supplied.
D)lower at low levels of quantity supplied and higher at high levels of quantity supplied.

Question 14

Generally,a firm is more willing and able to increase quantity supplied in response to a price change when

A)the relevant time period is short rather than long.
B)the relevant time period is long rather than short.
C)supply is inelastic.
D)the firm is experiencing capacity problems.

Question 15

As price elasticity of supply increases,the supply curve

A)becomes flatter.
B)becomes steeper.
C)becomes downward sloping.
D)shifts to the right.

Question 16

Suppose that two supply curves pass through the same point.One is steep,and the other is flat.Which of the following statements is correct?

A)The flatter supply curve represents a supply that is inelastic relative to the supply represented by the steeper supply curve.
B)The steeper supply curve represents a supply that is inelastic relative to the supply represented by the flatter supply curve.
C)Given two prices with which to calculate the price elasticity of supply,that elasticity would be the same for both curves.
D)A decrease in demand will increase total revenue if the steeper supply curve is relevant,while a decrease in demand will decrease total revenue if the flatter supply cure is relevant.

Question 17

A key determinant of the price elasticity of supply is the time period under consideration.Which of the following statements best explains this fact?

A)Supply curves are steeper over long periods of time than over short periods of time.
B)Buyers of goods tend to be more responsive to price changes over long periods of time than over short periods of time.
C)The number of firms in a market tends to be more variable over long periods of time than over short periods of time.
D)Firms prefer to change their prices in the short run rather than in the long run.

Question 18

Some firms eventually experience problems with their capacity to produce output as their output levels increase.For these firms,

A)market power is substantial.
B)supply is perfectly inelastic.
C)supply is more elastic at low levels of output and less elastic at high levels of output.
D)supply is less elastic at low levels of output and more elastic at high levels of output.

Question 19

In the long run,the quantity supplied of most goods

A)will increase in almost all cases,regardless of what happens to price.
B)cannot respond at all to a change in price.
C)can respond to a change in price,but the change is almost always inconsequential.
D)can respond substantially to a change in price.

Question 20

A key determinant of the price elasticity of supply is the

A)time horizon.
B)income of consumers.
C)price elasticity of demand.
D)importance of the good in a consumer's budget.

Question 21

If a 25% change in price results in a 40% change in quantity supplied,then the price elasticity of supply is about

A)0.63,and supply is elastic.
B)0.63,and supply is inelastic.
C)1.60,and supply is elastic.
D)1.60,and supply is inelastic.

Question 22

If the price elasticity of supply is 0.8,and price increased by 5%,quantity supplied would

A)increase by 4%.
B)increase by 6.25%.
C)decrease by 4%.
D)decrease by 6.25%.

Question 23

In which of the following situations would supply be the most elastic?

A)An auto parts manufacturer is operating at capacity.
B)A real estate developer in Boston is looking to build condos on the waterfront.
C)A furniture manufacturer is operating its factory 8 hours per day.
D)A hotel has all of its rooms booked for each night of the next 3 months.

Question 24

If a 40% change in price results in a 25% change in quantity supplied,then the price elasticity of supply is about

A)0.63,and supply is elastic.
B)0.63,and supply is inelastic.
C)1.60,and supply is elastic.
D)1.60,and supply is inelastic.

Question 25

Suppose the price elasticity of supply for cheese is 0.6 in the short run and 1.4 in the long run.If an increase in the demand for cheese causes the price of cheese to increase by 15%,then the quantity supplied of cheese will increase by

A)0.4% in the short run and 4.6% in the long run.
B)1.7% in the short run and 0.7% in the long run.
C)9% in the short run and 21% in the long run.
D)25% in the short run and 10.7% in the long run.

Question 26

If the price elasticity of supply is 1.2,and price increased by 5%,quantity supplied would

A)increase by 4.2%.
B)increase by 6%.
C)decrease by 4.2%.
D)decrease by 6%.

Question 27

Scenario 5-3
Suppose that the supply of aged cheddar cheese is inelastic,and the supply of bread is elastic.Both goods are considered to be normal goods by a majority of consumers.Suppose that a large income tax increase decreases the demand for both goods by 10%.
Refer to Scenario 5-3.The price elasticity of supply for bread could be

A)-1.
B)0.
C)0.5.
D)1.5.

Question 28

At a price of $1.00,a local coffee shop is willing to supply 100 cinnamon rolls per day.At a price of $1.20,the coffee shop would be willing to supply 150 cinnamon rolls per day.Using the midpoint method,the price elasticity of supply is about

A)0.45
B)0.90
C)1.11
D)2.20

Question 29

Suppose the price elasticity of supply for soccer balls is 0.3 in the short run and 1.2 in the long run.If an increase in the demand for soccer balls causes the price of soccer balls to increase by 20%,then the quantity supplied of soccer balls will increase by about

A)0.67% in the short run and 0.17% in the long run.
B)3% in the short run and 1.2% in the long run.
C)6% in the short run and 24% in the long run.
D)66.7% in the short run and 16.7% in the long run.

Question 30

If the price elasticity of supply for a window manufacturer is 1.5,

A)a 10% increase in the price of windows results in a 15% increase in the quantity of windows supplied.
B)supply is considered to be inelastic.
C)the manufacturer is likely operating very near capacity.
D)All of the above are correct.

Question 31

If a 15% change in price results in a 20% change in quantity supplied,then the price elasticity of supply is about

A)1.33,and supply is elastic.
B)1.33,and supply is inelastic.
C)0.75,and supply is elastic.
D)0.75,and supply is inelastic.

Question 32

If the price elasticity of supply is 1.5,and a price increase led to a 3% increase in quantity supplied,then the price increase is about

A)0.2%.
B)0.5%.
C)2.0%.
D)4.5%.

Question 33

If the price elasticity of supply is 0.4,and a price increase led to a 5% increase in quantity supplied,then the price increase is about

A)0.25%.
B)1.2%.
C)2%.
D)12.5%.

Question 34

A manufacturer produces 400 units when the market price is $10 per unit and produces 600 units when the market price is $12 per unit.Using the midpoint method,for this range of prices,the price elasticity of supply is about

A)0.45.
B)2.0.
C)2.2.
D)200.

Question 35

If a 20% change in price results in a 15% change in quantity supplied,then the price elasticity of supply is about

A)1.33,and supply is elastic.
B)1.33,and supply is inelastic.
C)0.75,and supply is elastic.
D)0.75,and supply is inelastic.

Question 36

Scenario 5-3
Suppose that the supply of aged cheddar cheese is inelastic,and the supply of bread is elastic.Both goods are considered to be normal goods by a majority of consumers.Suppose that a large income tax increase decreases the demand for both goods by 10%.
Refer to Scenario 5-3.The price elasticity of supply for aged cheddar cheese could be

A)-1.
B)0.
C)0.5.
D)1.5.

Question 37

If the price elasticity of supply is 1.2,and a price increase led to a 5% increase in quantity supplied,then the price increase is about

A)0.24%.
B)4.2%.
C)6%.
D)6.2%.

Question 38

Suppose the price elasticity of supply for minivans is 0.3 in the short run and 1.2 in the long run.If an increase in the demand for minivans causes the price of minivans to increase by 5%,then the quantity supplied of minivans will increase by about

A)1.5% in the short run and 6% in the long run.
B)6% in the short run and 1.5% in the long run.
C)16.7% in the short run and 4.2% in the long run.
D)4.2% in the short run and 16.7% in the long run.

Question 39

If the price elasticity of supply is 1.5,and a price increase led to a 1.8% increase in quantity supplied,then the price increase is about

A)0.67%.
B)0.83%.
C)1.20%.
D)2.70%.

Question 40

If a 30 percent change in price causes a 15 percent change in quantity supplied,then the price elasticity of supply is about

A)0.5,and supply is elastic.
B)0.5,and supply is inelastic.
C)2,and supply is inelastic.
D)2,and supply is elastic.

Question 41

Figure 5-14
Refer to Figure 5-14.Using the midpoint method,what is the price elasticity of supply between $100 and $220?

A)0.58
B)0.67
C)1.00
D)1.73

Question 42

Figure 5-14
Refer to Figure 5-14.Using the midpoint method,what is the price elasticity of supply between $16 and $40?

A)0.125
B)0.86
C)1.0
D)2.5

Question 43

Holding all other factors constant and using the midpoint method,if a candy manufacturer increases production by 20 percent when the market price of candy increases from $0.50 to $0.60,then supply is

A)inelastic,since the price elasticity of supply is equal to .91.
B)inelastic,since the price elasticity of supply is equal to 1.1.
C)elastic,since the price elasticity of supply is equal to 0.91.
D)elastic,since the price elasticity of supply is equal to 1.1.

Question 44

Figure 5-14
Refer to Figure 5-14.Over which range is the supply curve in this figure the least elastic?

A)$16 to $40
B)$40 to $100
C)$100 to $220
D)$220 to $430

Question 45

An increase in the price of cheese crackers from $2.25 to $2.45 per box causes suppliers of cheese crackers to increase their quantity supplied from 125 boxes per minute to 145 boxes per minute.Using the midpoint method,supply is

A)elastic,and the price elasticity of supply is 1.74.
B)elastic,and the price elasticity of supply is 0.57.
C)inelastic,and the price elasticity of supply is 1.74.
D)inelastic,and the price elasticity of supply is 0.57.

Question 46

Suppose that an increase in the price of melons from $1.30 to $1.80 per pound increases the quantity of melons that melon farmers produce from 1.2 million pounds to 1.6 million pounds.Using the midpoint method,what is the approximate value of the price elasticity of supply?

A)0.67
B)0.89
C)1.00
D)1.13

Question 47

Holding all other factors constant and using the midpoint method,if a tractor manufacturer increases production from 80 to 100 units when price increases by 15 percent,then supply is

A)inelastic,since the price elasticity of supply is equal to 0.68.
B)inelastic,since the price elasticity of supply is equal to 1.48.
C)elastic,since the price elasticity of supply is equal to 0.68.
D)elastic,since the price elasticity of supply is equal to 1.48.

Question 48

A bakery would be willing to supply 500 bagels per day at a price of $0.50 each.At a price of $0.80,the bakery would be willing to supply 1,100 bagels.Using the midpoint method,the price elasticity of supply for bagels is about

A)0.62.
B)0.77.
C)1.24.
D)1.63.

Question 49

Figure 5-15
Refer to Figure 5-15.Along which of these segments of the supply curve is supply most elastic?

A)AB
B)CD
C)DH
D)GH

Question 50

Figure 5-15
Refer to Figure 5-15.Along which of these segments of the supply curve is supply least elastic?

A)GH
B)CD
C)AC
D)AB

Question 51

At a price of $1.20,a local coffee shop is willing to supply 100 cinnamon rolls per day.At a price of $1.40,the coffee shop would be willing to supply 150 cinnamon rolls per day.Using the midpoint method,the price elasticity of supply is about

A)0.15
B)0.375
C)2.5
D)2.60

Question 52

At price of $1.20,a local pencil manufacturer is willing to supply 150 boxes per day.At a price of $1.40,the manufacturer is willing to supply 170 boxes per day.Using the midpoint method,the price elasticity of supply is about

A)2.0.
B)1.23.
C)1.00.
D)0.81.

Question 53

At price of $1.30 per pound,a local apple orchard is willing to supply 150 pounds of apples per day.At a price of $1.50 per pound,the orchard is willing to supply 170 pounds of apples per day.Using the midpoint method,the price elasticity of supply is about

A)1.14.
B)1.00.
C)0.875.
D)0.50.

Question 54

In January the price of widgets was $1.00,and Wendy's Widgets produced 80 widgets.In February the price of widgets was $1.50,and Wendy's Widgets produced 110 widgets.In March the price of widgets was $2.00,and Wendy's Widgets produced 140 widgets.The price elasticity of supply of Wendy's Widgets was about

A)0.79 when the price increased from $1.00 to $1.50 and 0.84 when the price increased from $1.50 to $2.00.
B)1.27 when the price increased from $1.00 to $1.50 and 1.19 when the price increased from $1.50 to $2.00.
C)0.79 when the price increased from $1.00 to $1.50 and 1.19 when the price increased from $1.50 to $2.00.
D)1.27 when the price increased from $1.00 to $1.50 and 0.84 when the price increased from $1.50 to $2.00.

Question 55

Figure 5-14
Refer to Figure 5-14.Over which range is the supply curve in this figure the most elastic?

A)$16 to $40
B)$40 to $100
C)$100 to $220
D)$220 to $430

Question 56

On a certain supply curve,one point is (quantity supplied = 200,price = $2.00)and another point is (quantity supplied = 250,price = $2.50).Using the midpoint method,the price elasticity of supply is about

A)0.2.
B)0.5.
C)1.0.
D)2.5.

Question 57

In January the price of dark chocolate candy bars was $2.00,and Willy's Chocolate Factory produced 80 pounds.In February the price of dark chocolate candy bars was $2.50,and Willy's produced 110 pounds.In March the price of dark chocolate candy bars was $3.00,and Willy's produced 140 pounds.The price elasticity of supply of Willy's dark chocolate candy bars was about

A)0.70 when the price increased from $2.00 to $2.50 and 0.76 when the price increased from $2.50 to $3.00.
B)0.88 when the price increased from $2.00 to $2.50 and 1.08 when the price increased from $2.50 to $3.00.
C)1.42 when the price increased from $2.00 to $2.50 and 1.32 when the price increased from $2.50 to $3.00.
D)1.50 when the price increased from $2.00 to $2.50 and 1.18 when the price increased from $2.50 to $3.00.

Question 58

A t-shirt maker would be willing to supply 75 t-shirts per day at a price of $18.00 each.At a price of $20.00,the t-shirt maker would be willing to supply 100 t-shirts.Using the midpoint method,the price elasticity of supply for t-shirts is about

A)0.37,and supply is elastic.
B)0.37,and supply is inelastic.
C)2.71,and supply is elastic.
D)2.71,and supply is inelastic.

Question 59

On a certain supply curve,one point is (quantity supplied = 200,price = $4.00)and another point is (quantity supplied = 250,price = $4.50).Using the midpoint method,the price elasticity of supply is about

A)0.22.
B)0.53.
C)1.00.
D)1.89.

Question 60

At price of $1.25,a paper manufacturer is willing to supply 150 spiral notebooks per day.At a price of $1.50,the paper manufacturer is willing to supply 175 spiral notebooks per day.Using the midpoint method,the price elasticity of supply is about

A)1.18.
B)1.00.
C)0.85.
D)0.25.

Question 61

If the price elasticity of supply for a good is equal to infinity,then the

A)supply curve is vertical.
B)supply curve is horizontal.
C)supply curve also has a slope equal to infinity.
D)quantity supplied is constant regardless of the price.

Question 62

Figure 5-16
Refer to Figure 5-16.Using the midpoint method,what is the price elasticity of supply between $6 and $8?

A)0.86
B)1.00
C)1.17
D)1.25

Question 63

If sellers do not adjust their quantity supplied at all in response to a change in price,the price elasticity of supply is

A)zero,and the supply curve is horizontal.
B)zero,and the supply curve is vertical.
C)infinity,and the supply curve is horizontal.
D)infinity,and the supply curve is vertical.

Question 64

Which of the following statements is valid when the market supply curve is vertical?

A)Market quantity supplied does not change when the price changes.
B)Supply is perfectly elastic.
C)An increase in market demand will increase the equilibrium quantity.
D)An increase in market demand will not increase the equilibrium price.

Question 65

As the price elasticity of supply approaches infinity,very small changes in price lead to

A)very large changes in quantity supplied.
B)very small changes in quantity supplied.
C)no change in quantity supplied.
D)None of the above is correct.

Question 66

If sellers respond to very small changes in price by adjusting their quantity supplied by extremely large amounts,the price elasticity of supply approaches

A)zero,and the supply curve is horizontal.
B)zero,and the supply curve is vertical.
C)infinity,and the supply curve is horizontal.
D)infinity,and the supply curve is vertical.

Question 67

Figure 5-17
Refer to Figure 5-17.Using the midpoint method,what is the price elasticity of supply between point A and point B?

A)0.4
B)0.6
C)1.67
D)2.16

Question 68

Which of the following statements is not valid when supply is perfectly elastic?

A)The elasticity of supply approaches infinity.
B)The supply curve is horizontal.
C)Very small changes in price lead to very large changes in quantity supplied.
D)The time period under consideration is more likely a short period rather than a long period.

Question 69

Which of the following statements is valid when supply is perfectly elastic at a price of $4?

A)The elasticity of supply approaches infinity.
B)The supply curve is vertical.
C)At a price below $4,quantity supplied is infinite.
D)At a price above $4,quantity supplied is zero.

Question 70

Figure 5-17
Refer to Figure 5-17.Using the midpoint method,what is the price elasticity of supply between point B and point C?

A)1.44
B)1.29
C)0.96
D)0.69

Question 71

Figure 5-15
Refer to Figure 5-15.Using the midpoint method,what is the price elasticity of supply between points C and D?

A)0.21
B)0.29
C)0.73
D)1.36

Question 72

Figure 5-17
Refer to Figure 5-17.If,holding the supply curve fixed,there were an increase in demand that caused the equilibrium price to increase from $6 to $7,then sellers' total revenue would

A)increase.
B)decrease.
C)remain unchanged.
D)The effect on total revenue cannot be determined from the given information.

Question 73

Figure 5-16
Refer to Figure 5-16.Using the midpoint method,what is the price elasticity of supply between $4 and $6?

A)0.75
B)1.00
C)1.20
D)1.25

Question 74

Figure 5-15
Refer to Figure 5-15.Using the midpoint method,what is the price elasticity of supply between points A and B?

A)2.33
B)1.0
C)0.43
D)0.1

Question 75

Figure 5-15
Refer to Figure 5-15.Using the midpoint method,what is the price elasticity of supply between points D and G?

A)1.89
B)1.26
C)0.53
D)0.34

Question 76

When supply is perfectly elastic,the value of the price elasticity of supply is

A)0.
B)1.
C)greater than 0 and less than 1.
D)infinity.

Question 77

Figure 5-18
Refer to Figure 5-18.Using the midpoint method,what is the price elasticity of supply between $4 and $5?

A)0.50
B)0.56
C)1.80
D)2.00

Question 78

Figure 5-15
Refer to Figure 5-15.Using the midpoint method,what is the price elasticity of supply between points B and C?

A)1.67
B)1.19
C)0.84
D)0.61

Question 79

A manufacturer produces 1,000 units,regardless of the market price.For this firm,the price elasticity of supply is

A)infinity.
B)zero.
C)one.
D)negative one.

Question 80

Figure 5-18
Refer to Figure 5-18.Using the midpoint method,what is the price elasticity of supply between $5 and $6?

A)0.60
B)0.64
C)1.57
D)1.67