U1 AOS 2 - Lesson 13 - Price Elasticity Supply

Question 1

What is price elasticity of supply?

Answer 1

Price elasticity of supply measures how much the quantity supplied of a good changes in response to a change in its price.

Question 2

True or False: If the price elasticity of supply is greater than 1, supply is considered elastic.

Answer 2

True

Question 3

Price Elasticity of Supply Formula

Answer 3

Percentage change in quantity supplied divided by percentage change in price.

Question 4

Which of the following factors can affect the price elasticity of supply?

A) Time period
B) Availability of resources
C) Nature of the good
D) All of the above.

Answer 4

D) All of the above.

Question 5

Short Answer: What does it mean if the price elasticity of supply is inelastic?

Answer 5

It means that the quantity supplied changes less proportionately than the price change.

Question 6

True or False:
The availability of inputs is a determinant of price elasticity of supply.

Answer 6

True

Question 7

Fill in the blank:
The longer the time period producers have to adjust their production levels, the __________ the price elasticity of supply.

Answer 7

more elastic

Question 8

Which of the following factors influences price elasticity of supply: A) Time B) Consumer preferences C) Government regulations?

Answer 8

A) Time

Question 9

What effect does the mobility of factors of production have on price elasticity of supply?

Answer 9

Higher mobility of factors of production generally leads to a more elastic supply.

Question 10

What is the formula for calculating price elasticity of supply?

Answer 10

Price elasticity of supply = (% Change in Quantity Supplied) / (% Change in Price)

Question 11

True or False:
If the price elasticity of supply is greater than 1, the supply is considered elastic.

Answer 11

True

Question 12

Fill in the blank:
When the price elasticity of supply is less than 1, the supply is considered __________.

Answer 12

inelastic

Question 13

What does a price elasticity of supply value of 0 indicate?

Answer 13

It indicates perfectly inelastic supply.

Question 14

Which of the following factors can affect the price elasticity of supply?

A) Time period
B) Availability of resources
C) Production flexibility
D) All of the above

Answer 14

D) All of the above

Question 15

True or False:
If the price elasticity of supply is greater than 1, supply is considered elastic.

Answer 15

True

Question 16

Fill in the blank:
If a 10% increase in price results in a 20% increase in quantity supplied, the price elasticity of supply is ______.

Answer 16

2

Question 17

A price elasticity of supply of 0.5 indicates that supply is ______.

Answer 17

inelastic

Question 18

What does it mean if the price elasticity of supply is equal to 1?

Answer 18

It means that the percentage change in quantity supplied is equal to the percentage change in price, indicating unitary elasticity.

Question 19

VCAA 2023
Question 10
The price elasticity of supply for avocados is likely to increase if

A. preservatives are invented to extend the shelf life of avocados.
B. there is an increase in demand for avocados.
C. there is a decrease in the price of avocados.
D. the cost of fertiliser increases.

Answer 19

A

Question 20

List the factors influencing PES

Answer 20

• Spare capacity
• Production period
• Durability

Question 21

Construct a supply curve that is price inelastic

Answer 21

Question 22

Construct a supply curve that is price elastic

Answer 22