PRICE ELASTICITY OF SUPPLY[IGCSE ECONOMICS]

In response to an increase in price from $5 per kilo to $6 per kilo a chicken farmer increased supply from 400 kilos to 500 kilos per week.

What is the price elasticity of supply?

• 0.8

• 0.9

• 1.25

• 1.2

The market for a good was in equilibrium. A change occurred which resulted in a new equilibrium with a higher price for the good and a lower quantity traded.

What change would have caused this?

• the demand curve moved to the left

• the demand curve moved to the right

• the supply curve moved to the left

• the supply curve moved to the right

A government subsidies the production of pineapples. This is likely to

• cause the supply of pineapples to increase at every price

• raise the costs of supplying pineapples

• raise revenue for the government

• increase the price of pineapples

A product has a price elasticity of supply of +2. A change in price causes the quantity supplied to change from 100 units to 120 units. What is the price change?

• a rise of 40%

• a rise of 10%

• a fall of 40%

• a fall of 10%

A supply curve shows the link between the quantity supplied and

• the price of the product.

• equilibrium output.

• demand.

• the scale of production.

In 2011 the US Government declared that the country must increase the manufacture of fuel from crops such as corn that have previously only been used for food. What is likely to happen in the market for corn?

• a shift to the left in the supply curve for corn

• a movement along the supply curve for corn

• a shift to the left in the demand curve for corn

• a movement along the demand curve for corn

Which change would make the supply of a product more price elastic?

• a reduction in the time that the product can be stored

• an increase in the number of close substitutes for the product

• an increase in the proportion of firms working at full capacity

• a reduction in the time taken to make the product

Many countries buy oil from Saudi Arabia. Which change is most likely to lead to a fall in the price of a barrel of oil?

• an increase in demand of 10% with no change in supply

• no change in demand with a 10% increase in supply

• an increase in demand of 10% with an increase in supply of 10%

• no change in demand with a 10% decrease in supply

A supply curve for a commodity is drawn to show how quantity supplied varies with

• the price of the commodity

• tastes.

• income.

• government taxes.

Cost of production is one of the determinant of supply.

• True

• False