Question 1

If the price elasticity of supply is zero,then

Accepted Answer

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

Question 2

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

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The answer of A bakery would be willing to supply...

Question 3

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

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The answer of Which of the following statements is valid...

Question 4

Figure 5-16 
-Refer to Figure 5-16.Which supply curve represents perfectly inelastic supply?

Accepted Answer

The perfectly inelastic supply is depicted by a vertical supply curve because, in this type of supply, the quantity supplied remains constant even if the price changes. In the figure, S1 is the only vertical line, indicating a perfectly inelastic supply.

Question 5

Suppose that an increase in the price of carrots from $1.30 to $1.80 per pound increases the quantity of carrots that carrot 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?

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The answer of Suppose that an increase in the price...

Question 6

An increase in the price of pure chocolate morsels from $2.25 to $2.45 causes suppliers of chocolate morsels to increase their quantity supplied from 125 bags per minute to 145 bags per minute.Supply is

Accepted Answer

A change in price from $2.25 to $2.45 results in an increase in quantity supplied from 125 bags per minute to 145 bags per minute, which is a percentage change of [(145-125)/((125+145)/2)]/[(2.45-2.25)/(2.35)] = 1.74. Since the price elasticity of supply is greater than 1, the supply is elastic. Therefore, the correct answer is A.

Question 7

In January the price of widgets was $2.00,and Wendy's Widgets produced 80 widgets.In February the price of widgets was $2.50,and Wendy's Widgets produced 110 widgets.In March the price of widgets was $3.00,and Wendy's Widgets produced 140 widgets.The price elasticity of supply of Wendy's Widgets was

Accepted Answer

To calculate the price elasticity of supply, we use the formula:

% change in quantity supplied / % change in price

Price increased from $2.00 to $2.50, which is a 25% increase:

% change in price = ((2.5 - 2.0) / 2.0) x 100% = 25%

Quantity supplied increased from 80 to 110 widgets, which is a 37.5% increase:

% change in quantity supplied = ((110 - 80) / 80) x 100% = 37.5%

Using these values in the formula gives us:

% change in quantity supplied / % change in price = 37.5 / 25 = 1.5

Therefore, the price elasticity of supply for this price increase is 1.5.

Price increased from $2.50 to $3.00, which is a 20% increase:

% change in price = ((3.0 - 2.5) / 2.5) x 100% = 20%

Quantity supplied increased from 110 to 140 widgets, which is a 27.3% increase:

% change in quantity supplied = ((140 - 110) / 110) x 100% = 27.3%

Using these values in the formula gives us:

% change in quantity supplied / % change in price = 27.3 / 20 = 1.365

Therefore, the price elasticity of supply for this price increase is 1.365.

The closest option to these values is choice C.

Question 8

Which of the following statements is not valid when the market supply curve is vertical?

Accepted Answer

When the market supply curve is vertical, the quantity supplied does not change with a change in price (option A), making supply perfectly inelastic (option B). However, an increase in market demand would not increase the equilibrium quantity (option C) because the quantity supplied is fixed at a certain quantity. An increase in market demand would only result in an increase in the equilibrium price (option D).

Question 9

Scenario 5-2
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 5-2.The equilibrium quantity will

Accepted Answer

Since both aged cheddar cheese and bread are normal goods and the demand for both goods decreases by 10%, the equilibrium quantity of both goods will decrease. However, since the supply of aged cheddar cheese is inelastic, the decrease in demand will result in a larger decrease in the equilibrium quantity of aged cheddar cheese compared to bread, which has an elastic supply. Therefore, the equilibrium quantity will decrease in both markets, but the decrease will be larger in the aged cheddar cheese market.

Question 10

Holding all other factors constant and using the midpoint method,if a pencil manufacturer increases production from 40 to 50 boxes when price increases by 20 percent,then supply is

Accepted Answer

The price elasticity of supply is calculated using the midpoint method as the percentage change in quantity supplied divided by the percentage change in price. The percentage change in quantity supplied is (50-40)/((50+40)/2) = 0.222, and the percentage change in price is 0.20. Thus, the elasticity is 0.222/0.20 = 1.11, which is greater than 1, indicating elastic supply.

Question 11

Scenario 5-2
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 5-2.The equilibrium price will

Accepted Answer

Since demand for both goods has decreased, there has been a decrease in the quantity demanded of both goods. However, since the supply of aged cheddar cheese is inelastic, the decrease in demand will have a larger impact on the equilibrium price of aged cheddar cheese than on the equilibrium price of bread. Therefore, the equilibrium price will decrease in the aged cheddar cheese market and decrease in the bread market.

Question 12

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

Accepted Answer

The price elasticity of supply is calculated using the midpoint method: [(1100 - 500) / ((1100 + 500) / 2)] / [(0.80 - 0.50) / ((0.80 + 0.50) / 2)] = 1.63. Since the elasticity is greater than 1, supply is elastic.

Question 13

If sellers do not adjust their quantities supplied at all in response to a change in price,

Accepted Answer

When sellers do not adjust their quantities supplied at all in response to a change in price, it implies that the supply is perfectly inelastic. This means that regardless of the change in price, the quantity supplied remains constant.

Question 14

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

Accepted Answer

When supply is perfectly elastic, the supply curve is horizontal and very small changes in price lead to large changes in quantity supplied. The elasticity of supply approaches infinity, meaning that even the slightest change in price will lead to an infinitely large change in quantity supplied. The time period under consideration could be either short or long, as perfect elasticity can occur in any time frame. Therefore, D is the statement that is not valid when supply is perfectly elastic.

Question 15

Figure 5-16 
-Refer to Figure 5-16.Which supply curve is most likely relevant over a very long period of time?

Accepted Answer

S3 is the most likely relevant supply curve over a very long period of time as it represents the maximum amount of output that can be produced given the resources available in the long run. S2 and S1 represent short-run supply curves that are affected by variable costs and inputs that can change over time. Therefore, S3 is the only relevant supply curve over a very long period of time.

Question 16

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

Accepted Answer

The price elasticity of supply is calculated as the percentage change in quantity supplied divided by the percentage change in price. From January to February, the price increased by 50% (from $1.00 to $1.50) and the quantity supplied increased by 37.5% (from 80 to 110). Therefore, the price elasticity of supply is 0.79 (37.5% / 50%). From February to March, the price increased by 33.3% (from $1.50 to $2.00) and the quantity supplied increased by 27.3% (from 110 to 140). Therefore, the price elasticity of supply is 0.84 (27.3% / 33.3%).

Question 17

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

Accepted Answer

If the price elasticity of supply is infinity, it means that any change in price will result in an infinitely large change in quantity supplied. This implies that the supply curve must be perfectly elastic, or horizontal, because any change in price will lead to an immediate and infinite adjustment in the quantity supplied.

Question 18

If the quantity supplied is the same regardless of price,then supply is

Accepted Answer

When the quantity supplied remains the same even if the price changes, it means that supply is perfectly inelastic. This is because the quantity supplied is not responsive to changes in price.

Question 19

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

Accepted Answer

A vertical supply curve indicates that the quantity supplied is fixed and does not change with price, meaning supply is perfectly inelastic.

Question 20

Which of the following would be true as the price elasticity of supply approaches infinity?

Accepted Answer

As the price elasticity of supply approaches infinity, it indicates that the supply is perfectly elastic, meaning that even a very small change in price will result in a very large change in the quantity supplied.

Quiz 5: Elasticity and Its Application

If the price elasticity of supply is zero,then

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

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

Figure 5-16 -Refer to Figure 5-16.Which supply curve represents perfectly inelastic supply?

Suppose that an increase in the price of carrots from $1.30 to $1.80 per pound increases the quantity of carrots that carrot 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?

An increase in the price of pure chocolate morsels from $2.25 to $2.45 causes suppliers of chocolate morsels to increase their quantity supplied from 125 bags per minute to 145 bags per minute.Supply is

Which of the following statements is not valid when the market supply curve is vertical?

Holding all other factors constant and using the midpoint method,if a pencil manufacturer increases production from 40 to 50 boxes when price increases by 20 percent,then supply is

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

If sellers do not adjust their quantities supplied at all in response to a change in price,

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

Figure 5-16 -Refer to Figure 5-16.Which supply curve is most likely relevant over a very long period of time?

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

If the quantity supplied is the same regardless of price,then supply is

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

Which of the following would be true as the price elasticity of supply approaches infinity?