chapter 5 elasticity of supply

Question 1

What is the price elasticity of supply

Answer 1

It measures how much the quantity supplied response to changes in the price

Question 2

Supply of a good is said to be elastic if what

Answer 2

If the quantity supplied responds substantially to changes in the price

Question 3

Supply is said to be inelastic if what

Answer 3

If the quantity supplied response only slightly to changes in the price

Question 4

The price elasticity of supply depends on what

Answer 4

Depends on the flexibility of sellers to change the amount of the good they produce

Question 5

In most markets what is a key determinant of the price elasticity of supply

Answer 5

It is the time period being considered

Question 6

What is the formula for price elasticity of supply

Answer 6

Percentage change in quantity supplied / percentage change in price

Question 7

What does it mean to be perfectly elastic with regards to elasticity of supply

Answer 7

A small percentage change in price produces an infinitely large percentage change in the quantity supplied this is shown by a horizontal Straight line

this means that an infinite amount will be put out the market for sale at the same or a higher price

Question 8

What does it mean to be elastic with regards to elasticity of supply

Answer 8

A given percentage changes in price it produces a larger percentage change in the quantity supplied

Question 9

What does it mean to be unit or unitary elastic with regards to elasticity of supply

Answer 9

A given percentage change in price produces an equal percentage change in the quantity supplied

Question 10

What does it mean to be any elastic with regards to elasticity of supply

Answer 10

Given percentage change in price produces a lower percentage change in the quantity supplied

Question 11

With regards to elasticity of supply, what does it mean to be perfectly inelastic

Answer 11

I given percentage change in price produces no effective change in the quantity

This is shown by a vertical straight line

Question 12

What is the definition of price elasticity of supply

Answer 12

A measure of how much the quantity supplied of a good responds to a change in the price of that good, computed as the percentage change in quantity supplied divided by the percentage change in price