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Worksheets2.8 Price Elasticity of Supply
Total questions: 85
Worksheet time: 2hrs 32mins
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
If the firm have more spare capacity, then it will be possible for the firm to increase supply. This means supply is
Elastic
Inelastic
Unitary elasticity
Products like pencils, books, and other school stationaries are easy to store in a warehouse. If a firm producing such goods and has a good warehousing facilities and can supply more when prices are rising, then supply will be
Inelastic
Unitary elasticity
Elastic
None of the above
Firms producing perishable items with less warehousing facility will be able to respond to increase in price and and they can supply more to meet the increase in demand. Is the statement true or false
False
True
If there are more firms producing more luxury items then supply of luxury items will increase. In such case, if there is any increase in price, the firms can supply more to make use of this rise in price.
True
False
If there are more firms producing more luxury items then supply of luxury items will increase. In such case, if there is any increase in price, the firms can supply more to make use of this rise in price.Supply will be....
Elastic
Inelastic
Unitary Elasticity
None of the above
In agriculture farming, it takes time to increase the supply of fruits and vegetables as the harvesting needs time. Hence supply will be less responsive to increase in price,nad supply will be ...
Inelastic
Elastic
Unitary Elasticity
None of the above
Supply is more price elastic if more time is available as the firms can adjust the supply and increase the supply when price are increasing.
True
False
What does PES stand for?
Price Elasticity of Stock
Price Elasticity of Sales
Price Elasticity of Supply
Price Elasticity of Service
Supply is more price elastic if more time is available as the firms can adjust the supply and increase the supply when price are increasing.
True
False
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
for PES = 1
PES is perfectly elastic
PES is unit elastic
PES is perfectly inelastic
PES is elastic
PES =
% change in quantity supplied of the product / % change in price of the product
% change in price of the product / % change in quantity supplied of the product
% change in quantity supplied of the product * % change in price of the product
% change in quantity supplied of the product - % change in price of the product
The price of one bedroom apartments in Cheyenne increased from $55,000 to $65,000 and the quantity of apartment for sale increased from 25 to 30. At the midpoint between these two prices, the price elasticity of supply for apartments in Cheyenne is equal to
0.916
0.756
1.995
0.085
for PES = 1
PES is perfectly elastic
PES is unit elastic
PES is perfectly inelastic
PES is elastic
The price of a product falls from $5 to $4.
As a result, its supply in a given time period falls from 800 units to 700 units.
What is the PES?
A. 0.71
B. 0.625
C. 1.6
D. 0.5
A firm supplies 10 units of a product at $48 per unit.
If the PES is 4, how many units will the firm supply at a price of $60 per unit?
A. 10
B. 20
C. 40
D. 60
Which of these estimates of PES is most likely to apply to the supply of raw coffee beans?
A. 0.1
B. 1
C. 1.1
D. 10
The short-run supply of fresh flowers for export from Kenya
to the UK is less price elastic than the supply of green beans.
Why is this?
A. The price of cut flowers fluctuates more than the price of green beans.
B. Fresh flowers are purchased for special occasions.
C. Fresh flowers only last a few days.
D. Fresh flowers cannot be stored for as long as green beans.
Which of these products is most likely to have a perfectly elastic PES?
A. seats to watch athletics finals at the Olympic Games
B. an original painting by the famous French artist Monet
C. music downloads to an electronic device
D. a limited edition Hublot wristwatch
In very hot weather, an ice cream manufacturer decides to increase the price of its product by 10%.
It is able to increase production by 6% one week after the price increase was announced.
How can the PES be described?
A. elastic
B. inelastic
C. perfectly elastic
D. perfectly inelastic
What is the key characteristic of a product with a perfectly inelastic price elasticity of supply (PES)?
A. Producers can easily adjust production quantities
B. The PES value is equal to 1
C. Consumers are highly responsive to price changes
D. Quantity supplied remains constant regardless of price changes
A technological innovation leads to a significant increase in the production capacity of a product with elastic supply. How might this impact the stakeholders involved?
A. Producers' revenue will decrease
B. Consumers will benefit from lower prices
C. Producers will reduce their production
D. Consumers' demand will become less elastic
A product has a price elasticity of supply (PES) of 0.2.
How might this impact producers during a sudden surge in demand?
A. producers will increase output a little
B. producers will gain substantial revenue
C. producers will find it difficult to increase production
D. producers will lower production to maintain scarcity
If the price doubles and the quantity supplied also doubles, the price elasticity of supply for the good is
-1
-2
1
2
If the price elasticity of supply for a good is 10, then supply is
elastic
inelastic
perfectly inelastic
perfectly elastic
Perfectly inelastic supply
High cost of factor substitution. This statement refers to
Price elastic supply
Price inelastic supply
Difficult to substitute factors of production. This statement refers to
Price elastic supply
Price inelastic supply
Large number of firms in the industry. This statement refers to
Price elastic supply
Price inelastic supply
Long time period. This statement refers to
Price elastic supply
Price inelastic supply
High level of available stocks. This statement refers to
Price elastic supply
Price inelastic supply
Supply will be inelastic
if there is a large number of producers in the industry
if a firm has many available stocks
in the short run
if it is easy to switch factors of production
If the percentage change in supply is greater than the percentage change in price, then supply is:
Perfectly elastic
Price inelastic
Perfectly inelastic
Price elastic
What does a figure for the price elasticity of supply greater than 1 indicate?
Price inelastic supply
Price elastic supply
Perfectly elastic supply
Perfectly inelastic supply
Which factor affects the elasticity of supply by making it more elastic?
Short production period in agriculture
Difficulty in transferring economic resources into the industry
Limited spare capacity in the industry
Longer time period for firms to invest in factors of production
In which industry is supply usually more elastic due to the ease of increasing production?
Healthcare
Technology
Manufacturing
Agriculture
What situation represents perfectly inelastic supply?
Firms willing to supply any amount of the product at a given price
Agricultural products taking years to bring to the market
Resources available for firms to increase supply
Increased output in response to a price increase
What does a situation of perfectly elastic supply indicate?
Firms unable to increase supply no matter how much price increases
Firms willing to supply any amount of the product at a given price
Agricultural products taking years to bring to the market
Increased output in response to a price increase
What does the relationship between the price elasticity of supply and the time period indicate?
Supply tends to be relatively elastic in the short run
Supply tends to be relatively elastic in the long run
Supply tends to be relatively inelastic in the short run
Supply tends to be relatively inelastic in the long run
Jess owns a sandwich shop. The price of a sandwich recently increased from $5 to $7. Jess responded by increasing the quantity of sandwiches she supplied from 70 to 90 per day. Then, at the midpoint between these two prices, Jess's price elasticity of supply is equal to
1.33
0.75
3.00
1.50
Suppose the current price of barley is $7 per bushel and at that price 100,000 bushels are grown by a Colorado farmer. If the price of barley rises to $8 and quantity supplied increases to 130,000 bushels, then at the midpoint between these two prices, the price elasticity of supply for barley equals
13.33
1.96
0.51
26.78
Perfectly Elastic Supply
Relatively Elastic Supply
Relatively Inelastic Supply
Perfectly inelastic supply
Perfectly inelastic supply
there is no change in quanity supplied with change in price of product
change in quantity supplied of a commodity in response to change in its price
Perfectly Elastic Supply
there is no change in quanity supplied with change in price of product
the supply of a commodity changes without change in its price the supply of a commodity changes without change in its price, the supply of a commodity changes with change in its price supply of a commodity
Relatively Elastic Supply
percentage change in quantity supply exceeds the percentage change in quantity supply exceeds the percentage change in price.
no change in quanity supplied with change in price of product
Unit Elastic Supply
the percentage change in quantity supplied is less than percentage change in price
percentage change in supply is equal to percentage in price
Why is the price elasticity of supply low or zero when the price changes?
Producers are unable to adjust their production levels
Producers are unwilling to adjust their production levels
Producers are unaware of the price change
Producers are unable to change the price
What factor influences the price elasticity of supply related to resource movement?
The cost of moving resources
The availability of resources
The type of resources
The demand for resources
Which type of products are easier to provide compared to manufacturing products?
High-tech items
Oil and minerals
Services like hairdressing and gardening
Specialized products
What can companies do when they have extra capacity?
Increase production without additional costs
Decrease production without additional costs
Increase production with additional costs
Stop production
What happens when a company is already utilizing all of its resources to the maximum?
It becomes easier and cheaper to respond to a price increase
It becomes harder and more expensive to respond to a price increase
The company stops producing
The company reduces its prices
Why is it harder and more expensive for a company to respond to a price increase when operating at full capacity?
Building a new factory is time-consuming and costly
The demand for the product decreases
The company lacks skilled workers
The company lacks storage space
How can companies that store stock better respond to changes in price?
They can quickly release the stock to the market
They can reduce the price of the stock
They can increase the price of the stock
They can stop storing stock
What are the determinants of price elasticity of supply?
Time and demand
Resource availability and demand
Resource movement and storage capacity
Production costs and resource availability
What is the percentage change in quantity supplied?
0.25
0.5
0.75
1
According to the law of supply, the coefficient (i.e. value) of price elasticity of supply has to be…
Negative
Positive
What is the percentage change in price?
0.25
0.5
0.75
1
Which of the following shows that the supply of laptop computers is elastic?
The quantity supplied of laptop computers increases when the price increases.
The quantity supplied of laptop computers increases when there are more suppliers.
The quantity supplied of laptop computers decreases when consumers’ income falls.
The quantity supplied of laptop computers increases by 50% when the price increases by 30%.
Once the price of good X decreases, the quantity supplied of the good drops to zero immediately. The price elasticity of supply of the good is
perfectly inelastic.
perfectly elastic.
unitary elastic.
inelastic.
Suppose the number of seats in the cinema is fixed. The current unit price of the movie tickets is P1. Which of the following statements are CORRECT?
There is an excess supply of movie tickets.
If the price of the movie tickets decreases, the total revenue of the cinema must increase.
The demand for the movie tickets is elastic.
The supply of the movie tickets is perfectly inelastic.
Which of the following can explain why the supply of domestic organic vegetables is inelastic?
It is not difficult to enter the market of organic vegetables.
There is a lot of spare farmland to grow organic vegetables.
Highly specialised techniques are required for growing organic vegetables.
People are not used to eating organic vegetables.
Which is correct?
Supply elastic left, and supply inelastic right
Supply inelastic left, and supply inelastic right
Supply elastic left, and supply elastic right
Supply inelastic left, and supply elastic right
