MRU5.4: Elasticity of Supply

Q10: Suppose at a price of $8 per pizza, Vito is willing to produce 100 pizzas per day. But at a price of $5 per pizza, Vito is only willing to make 25 pizzas per day. What is the value of the elasticity of Vito's pizza supply? - 0.14 - 2.60 - 0.38 - 7.22

A: 2.60

Q2: Which of the following is true about a good with elastic supply? - An increase in price will increase the quantity supplied only a little. - An increase in price will increase the quantity supplied by a lot. - An increase in price will shift the supply curve to the right by a lot. - An increase in price will shift the supply curve to the right only a little.

A: An increase in price will increase the quantity supplied by a lot.

Q5: What basic question is the most useful in assessing the elasticity of supply for a good? - What is the size of the profit margin for the producers of this good? - Is this good considered to be a necessity or a luxury? - Does the supply curve for this good slope upward or downward? - How easily can producers expand or reduce production of this good?

A: How easily can producers expand or reduce production of this good?

Q6: Which of the following is NOT among the determinants of the elasticity of supply? - The fraction of their budgets that consumers spend on the good - The share of the input market represented by the good - The rate at which per-unit costs rise with increased production - The geographic scope of the market under consideration

A: The fraction of their budgets that consumers spend on the good

Q8: Which of the following would be the MOST elastic? - The supply of automobiles in North America - The supply of toothpicks in North America - The supply of toothpicks in Baton Rouge, Louisiana - The supply of automobiles in Baton Rouge, Louisiana

A: The supply of toothpicks in Baton Rouge, Louisiana

Q3: How do elasticity and slope relate? - Elasticity is the word that economists use to describe the concept of slope. - When two curves pass through the same point, their relative slopes can reveal their relative elasticities. - They have the same absolute value but opposite signs. - There is no consistent or meaningful relationship between slope and elasticity.

A: When two curves pass through the same point, their relative slopes can reveal their relative elasticities.

Q4: If two supply curves pass through the same point, the curve that is less elastic will: - be steeper. - be curvier. - be straighter. - be flatter.

A: be steeper.

Q9: If the price of avocados rises by 12% and, in response, producers increase quantity supplied by 9%, then the elasticity of supply: - is equal to 0.75 and supply is elastic. - is equal to 1.33 and supply is elastic. - is equal to 0.75 and supply is inelastic. - is equal to 1.33 and supply is inelastic.

A: is equal to 0.75 and supply is inelastic.

Q7: Professor Tabarrok concludes that the supply of Picasso paintings is probably inelastic because: - Picasso used very specific paints, and he represented a large share of the market for these inputs. - the price of Picasso paintings can rise significantly, but the supply of Picasso paintings is not likely to increase much in response. - if the price of Picasso paintings increases, people who have Picasso paintings in their homes may decide to sell them. - Picasso stopped producing paintings in the 1970s, so a relatively long time horizon applies to Picasso paintings.

A: the price of Picasso paintings can rise significantly, but the supply of Picasso paintings is not likely to increase much in response.

Q1: The elasticity of supply measures how responsive: - the quantity supplied is to a change in income. - the quantity supplied is to a change in costs. - the supply is to a change in income. - the quantity supplied is to a change in price.

A: the quantity supplied is to a change in price.