3.1.2.5 Supply Elasticity Factors NOTES

What is the formula to calculate the price elasticity of supply?

Which factor does NOT influence the price elasticity of supply?

• Production technology

• The availability of raw materials

• Consumer income levels

• Time period considered

If the price elasticity of supply is greater than 1, how is the supply described?

• Inelastic

• Unit elastic

• Perfectly elastic

• Elastic

What does a price elasticity of supply equal to zero mean?

• Supply is perfectly inelastic

• Supply is perfectly elastic

• Supply is unit elastic

• There is no supply at all

How does the availability of substitutes for production inputs affect the price elasticity of supply?

• Makes it more inelastic

• Makes it more elastic

• Does not affect elasticity

• Makes it perfectly elastic

What role does the time period play in determining the price elasticity of supply?

• Longer time periods generally lead to more inelastic supply

• Longer time periods generally lead to more elastic supply

• Time period has no effect on elasticity

• Shorter time periods generally lead to more elastic supply

What happens to the price elasticity of supply when production capacity is fully utilized?

• It increases

• It decreases

• It remains constant

• It becomes perfectly elastic

Which of the following is likely to have the most elastic supply?

• Custom-made products

• Agricultural products

• Digital products

• Rare minerals

How does the complexity of production technology affect the price elasticity of supply?

• More complex technologies increase elasticity

• More complex technologies decrease elasticity

• Complexity has no effect on elasticity

• More complex technologies make supply perfectly inelastic

What is the impact of government regulations on the price elasticity of supply?

• They make supply more elastic

• They make supply more inelastic

• They have no impact on elasticity

• They make supply perfectly elastic