DP1 PES & More

1. What is Price Elasticity of Supply (PES)?

• A measure of how sensitive supply is to price changes
• A measure of demand for a product
• A measure of consumer preferences
• A measure of market competition

2. If the PES is greater than 1, the supply is considered:

• Elastic
• Inelastic
• Unitary elastic
• Perfectly elastic

3. What is the formula for calculating PES?

• (Percentage change in quantity supplied) / (Percentage change in price)
• (Percentage change in price) / (Percentage change in quantity supplied)
• (Total quantity supplied) / (Price change)
• (Price change) / (Total quantity supplied)

4. When PES is less than 1, the supply is considered:

• Elastic
• Inelastic
• Unitary elastic
• Perfectly elastic

5. Which of the following is a determinant of Price Elasticity of Supply?

• Time period
• Consumer preferences
• Market competition
• Government regulations

6. In the short run, supply tends to be more:

• Elastic
• Inelastic
• Unitary elastic
• Perfectly elastic

7. In the long run, supply tends to be more:

• Elastic
• Inelastic
• Unitary elastic
• Perfectly elastic

8. Which of the following is a determinant of PES related to production capacity?

• Spare production capacity
• Limited production capacity
• Overproduction
• Demand fluctuations

9. If a good has many close substitutes, its PES is likely to be:

• High
• Low
• Zero
• Negative

10. Which of the following goods is likely to have a highly elastic supply?

• Handmade crafts
• Agricultural products
• Oil
• Precious gems