Ch 9

PES is a measure of the responsiveness of _____ to a given change in _____.

• price, profit

• price, supply

• supply, price

• supply, profit

PES allows firms to determine

• how a change in price will affect production levels

• how a change in price will affect demand

• how a change in production levels will impact quantity demanded

• how a change in demand will impact price

PES coefficient can range from ​​ to ​ ​

• -1, infinity

• 0, infinity

• 0,1

• -1, 1

Which is true when PES=1

• It is unit price elastic

• It is perfectly price elastic

• it is price inelastic

• it is perfectly price inelastic

What does it mean for PES to be unit price elastic?

• A percentage increase (or decrease) in price leads to an equal percentage increase (or decrease) in quantity supplied

• The percentage increase (or decrease) in price is higher than the percentage increase (or decrease) in quantity suplied

• The percentage increase (or decrease) in price is lower than the percentage increase (or decrease) in quantity supplied

• The percentage increase (or decrease) in price is higher than the percentage increase (or decrease) in quantity demanded

What does it mean if PES = infinity?

• The supply is perfectly price elastic

• The supply is perfectly price inelastic

• The supply is unit price elastic

• The supply is infinite

when PES=infinity

• Any change in quantity supplied gives rise to a change in price

• any change in quantity supplied has no change in price

• supply is perfectly price inelastic

• any change in price will not change the quantity supplied

A less steep (shallower) supply curve means the PES is _______, aka ______________

• higher, more elastic

• lower, relatively inelastic

• 0, perfect price inelastic

• infinite, perfectly price elastic

Formula to calculate PES=

• percentage change in price/ percentage change in quantity supplied

• percentage change in quantiity demanded/ percentage change in income

• percentage change is quantity supplied/ percentage change in price of a substitute

• percent change in quantity supplied/ percentage change in price

Why must PES always be a positive value?

• The law of demand

• The income effect

• The law of supply

• The law of equilibrium prices