Practice Questions
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If the government imposes a tax on a product, how is the price elasticity of supply likely to be affected?
When a tax is added, it costs more for producers to make the product. Other options are incorrect because Some might think that a tax makes producers ...
If the price of a product increases significantly, which of the following factors will most likely determine how much the supply will respond to this change in price?
The time allowed for production changes is key. Other options are incorrect because Some might think substitutes matter more; It's easy to confuse con...
How does the length of time affect the price elasticity of supply when prices change significantly in the market?
Over time, producers can change how much they make. Other options are incorrect because Some might think that supply never changes, no matter what; It...
How does the availability of substitutes influence the price elasticity of supply in a competitive market when there is a price increase?
When substitutes are available, producers can easily switch to making those instead. Other options are incorrect because This answer suggests that pro...
In a market characterized by unitary elastic supply, how does the price elasticity of supply differ between the short-run and long-run when demand conditions shift significantly?
In the long-run, suppliers can adjust more easily to changes. Other options are incorrect because Some might think that supply stays the same in both ...
What does price elasticity of supply measure in economics?
Price elasticity of supply shows how much the amount of a product changes when its price changes. Other options are incorrect because Some might think...
Which of the following is NOT a determinant of price elasticity of supply?
Consumer preferences do not affect how much producers can supply. Other options are incorrect because Some might think time affects supply; People may...
What does it mean when a product has elastic supply?
Elastic supply means that when prices go up or down, the amount made changes a lot. Other options are incorrect because Some might think that supply s...
Which of the following statements accurately describe the implications of price elasticity of supply in market dynamics? Select all that apply.
Other options are incorrect because This statement suggests that a high elasticity means a big change in production; This option implies that inelasti...
A company experiences a significant increase in the price of its product, leading to a substantial increase in the quantity supplied. How would you classify the price elasticity of supply for this product?
When the price goes up a lot and the company makes much more of the product, we say supply is elastic. Other options are incorrect because Some might ...
If the price of a good increases by 10% and the quantity supplied increases by 5%, how would you classify the price elasticity of supply?
Inelastic means that the quantity supplied does not change much when the price changes. Other options are incorrect because Some might think that any ...
Arrange the following steps in the correct order to understand the price elasticity of supply and its implications in a market setting: A) Analyze how producers respond to price changes, B) Calculate the price elasticity of supply using the formula, C) Determine if the supply is elastic, unit elastic, or inelastic, D) Predict market behavior based on the elasticity results.
First, we look at how producers react to price changes. Other options are incorrect because This option suggests starting with producer responses befo...
A firm faces a significant increase in demand for its product due to a sudden trend. If the firm has a price elasticity of supply greater than one, what is the most likely outcome in terms of production response?
When a firm has a price elasticity of supply greater than one, it means they can easily increase production. Other options are incorrect because Some ...
In the context of supply responsiveness, if a price increase leads to a significant increase in quantity supplied, this is analogous to a situation where a rise in temperature leads to what kind of response in ice melting? A:B :: C:?
When the temperature rises, ice melts quickly. Other options are incorrect because Some might think melting happens slowly; Thinking there is no melti...
If a good has a price elasticity of supply greater than one, what can we infer about the producers' response to a price increase?
When the price goes up, producers can quickly make more of the good. Other options are incorrect because This option suggests that producers will make...
The price elasticity of supply measures how the quantity supplied responds to changes in price. If the price elasticity of supply is greater than one, it is considered _______________.
When the price elasticity of supply is greater than one, it means that suppliers can easily change how much they produce when prices go up or down. Ot...
A local farmer notices that the price of tomatoes has increased significantly due to a seasonal shortage. Given this situation, the farmer decides to increase the quantity of tomatoes supplied to the market. How would you describe the price elasticity of supply for tomatoes in this scenario?
The supply is elastic. Other options are incorrect because This option suggests the farmer can't respond quickly; This option implies that the price c...
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