Unit 11

Question 1

What are the conditions of supply?

Answer 1

The conditions of supply are factors which affect the quantity of a product supplied other then the price of the product, such as income or the price of other goods.

Question 2

Define the economic long run.

Answer 2

The long run in economics is the period of time where all factors of production are variable in quantity, but the state of technology remains constant.

Question 3

What is price elasticity of supply?

How is it calculated?

Answer 3

Price elasticity of supply is a measure of the responsiveness of the quantity supplied of a product to a change in the price of the product.
It is calculated by dividing the percentage change in quantity supplied by the percentage change in price.

Question 4

Define producer surplus.

Answer 4

Producer surplus is the difference between the market price of a product and the price at which a firm is prepared to supply.

Question 5

Define the economic short run.

Answer 5

The economic short run is the period of time where at least one factor of production can be varied.

Question 6

Define supply.

Answer 6

Supply is the quantity of goods that suppliers are willing to sell at any given price over a period of time.