Price Elasticity of Supply
115 questions· page 1 of 12
What will influence the value of the price elasticity of supply of a good?
Options
A the level of producer surplus
B the time period under consideration
C the total income spent on the good
D whether the good is a necessity
What would best explain why the price elasticity of supply (PES) is likely to be lower for fresh vegetables grown within a country compared to the PES of goods manufactured in that country?
Options
A Alternative supplies can be flown in from foreign producers.
B A positive price change encourages a positive output change along the supply curve.
C Fresh vegetables has a horizontal supply curve.
D There is a seasonal time lag involved in planting and harvesting more fresh vegetables.
The diagram shows the short-run supply curve (SSR) and long-run supply curve (SLR) for a bakery.
The price of a loaf of bread increases from $2.00 to $2.20.
What is the bakery’s price elasticity of supply (PES) in the short run and in the long run when the price of a loaf of bread increases?
Options
| short run | long run | |
|---|---|---|
| A | 0.5 | 2.0 |
| B | 0.5 | 1.4 |
| C | 2.0 | 0.7 |
| D | 2.0 | 0.5 |
A theatre has a fixed number of tickets to sell for each performance.
What is the price elasticity of supply?
Options
A perfectly elastic
B perfectly inelastic
C unit elastic and negative
D unit elastic and positive
A construction firm estimates that the price elasticity of supply in building a nuclear power plant is +0.1.
What might explain this?
Options
A The firm can easily find new land as required.
B The firm is competing with many other construction firms.
C The firm needs time to hire the highly skilled labour required.
D There is a lack of close substitutes for nuclear power.
What is the likely nature of the price elasticity of supply of a crop such as rice?
Options
A highly elastic in both the short and the long run as rice is an essential product
B highly elastic in the short run and more inelastic in the long run as production methods improve
C highly inelastic in both the short and the long run as the land area of a country is fixed
D highly inelastic in the short run and more elastic in the long run as it takes time to plant rice
The curve in the diagram shows a relationship between the price and the quantity of a product. It has not been given a label.
What is an accurate description of the curve?
Options
A a perfectly elastic demand curve
B a perfectly inelastic supply curve
C a relatively elastic supply curve
D a unitary elastic demand curve
The table shows the price of a good and total expenditure on the good during specific periods when the market is in equilibrium.
| period | price ($) | total expenditure ($) |
|---|---|---|
| 1 | 12 | 96 000 |
| 2 | 5 | 40 000 |
| 3 | 8 | 64 000 |
| 4 | 10 | 80 000 |
| 5 | 4 | 32 000 |
What can be deduced from this data?
Options
A The good has constant opportunity cost.
B The good is an inferior good.
C The price elasticity of demand is equal to one.
D The price elasticity of supply is equal to zero.
Four firms produce furniture. The table shows the price elasticity of supply (PES) for each firm.
If the price of furniture rises by 5% which firm would experience an increase in quantity supplied of 2.5%?
Options
| firm | PES for furniture |
|---|---|
| A | 2.5 |
| B | 2.0 |
| C | 0.6 |
| D | 0.5 |
Which factor affects the price elasticity of supply of a product?
Options
A availability of stocks
B percentage of income spent on the product
C price of substitutes
D wage rate