Understanding Price Elasticity of Supply and Characteristics of Supply Curves

The video tutorial explains the concept of price elasticity of supply, which measures how supply responds to price changes. It distinguishes between elastic and inelastic supply, where elastic supply shows a more than proportionate change in quantity supplied with price changes, and inelastic supply shows less. The tutorial covers the possible values of price elasticity, including unit elasticity, and special cases like perfectly elastic and inelastic supply. It also discusses non-linear supply curves and how to determine elasticity at different points using tangents. The video concludes with a review of key concepts and encourages note-taking for better understanding.

What does price elasticity of supply measure?

• The total quantity supplied in the market

• The change in demand when price changes

• The cost of production for suppliers

• The responsiveness of supply to changes in price

How is a good defined as elastic?

• When a change in price causes the same proportionate change in quantity supplied

• When a change in price causes a more than proportionate change in quantity supplied

• When a change in price causes a less than proportionate change in quantity supplied

• When a change in price causes no change in quantity supplied

What is the price elasticity of supply when supply changes by the same proportion as the price?

• Greater than one

• Equal to zero

• Equal to one

• Less than one

Which type of supply curve is represented by a shallow gradient?

• Perfectly inelastic supply curve

• Inelastic supply curve

• Elastic supply curve

• Unit elastic supply curve

What happens to quantity supplied in a perfectly inelastic supply curve when price changes?

• It increases

• It decreases

• It remains the same

• It fluctuates randomly

In a perfectly elastic supply curve, what happens if the price falls below a certain level?

• Supply remains constant

• No quantity is supplied

• Supply decreases

• Supply increases

How can the price elasticity of supply be approximated on a non-linear supply curve?

• By measuring the curve's length

• By comparing it to a linear supply curve

• By using tangents at different points

• By calculating the area under the curve

What is the elasticity of supply at low quantities when firms have spare capacity?

• Unit elastic

• Perfectly inelastic

• Elastic

• Inelastic

As quantity increases and spare capacity is used up, how does the elasticity of supply change?

• It becomes more elastic

• It becomes more inelastic

• It becomes perfectly elastic

• It remains constant

What is the significance of recognizing different supply curve shapes?

• To calculate total revenue

• To predict market demand

• To determine the cost of production

• To understand the type of price elasticity of supply