Supply and Price Elasticity

Price elasticity of supply is the responsiveness of

• demand to a change in price.

• price to a change in supply.

• quantity supplied to a change in price.

• price to a change in supply.

Factory owner Susan has calculated that her PES is 3. This number means that,

• if price were to rise by 2% Susan would supply 6% more products.

• If price were to rise by 2% Susan would supply 3% more products.

• the percentage change in price is three times the percentage change in quantity.

• in the PES formula, the top number is smaller than the bottom number.

The PES for wheat in a given country

• is less elastic the longer the time period in question.

• is more elastic the more substitutes there are for wheat.

• is greater the more wheat there is in storage.

• will be higher if there are restrictions on wheat imports.

If the supply curve of a product is vertical, PES is equal to

• 0.

• 1.

• -1.

• infinity.

The supply of agricultural goods is

• relatively inelastic while the supply of manufactured goods is relatively elastic.

• relatively elastic while the supply of manufactured goods is relatively inelastic.

If storage of a good is cheap and readily available, supply is likely to be

• relatively elastic.

• relatively inelastic.

• perfectly inelastic.

• perfectly elastic.

The mining boom in created a shortage of labour in the hospitality industry in WA. This made the supply of restaurant meals in WA

• perfectly inelastic.

• more elastic.

• perfectly elastic.

• less elastic.

If the price of a product doubled and in response the quantity supplied also doubled then the PES is equal to

• 1

• -1

• 2

• o