Eco Quiz #3a (Modules 11,12,13) (Week 3)
If the price elasticity of supply for wheat is less than 1, then the supply of wheat is
inelastic
Frequently, in the short run, the quantity supplied of a good is
not very responsive to price changes.
Some firms eventually experience problems with their capacity to produce output as their output levels increase. For these firms,
supply is more elastic at low levels of output and less elastic at high levels of output.
When a supply curve is relatively flat, the
supply is relatively elastic.
If the quantity supplied responds only slightly to changes in price, then
supply is said to be inelastic.
The price elasticity of supply measures how much
the quantity supplied responds to changes in the price of the good.
Which of the following is not a determinant of the price elasticity of demand for a good?
the steepness or flatness of the supply curve for the good
A manufacturer produces 1,000 units, regardless of the market price. For this firm, the price elasticity of supply is
zero
If sellers do not adjust their quantity supplied at all in response to a change in price, the price elasticity of supply is
zero, and the supply curve is vertical.
Refer to Table 5-1. Which of the following is consistent with the elasticities given in Table 5-2?
---NOT A is diamond necklaces, and B is beds. ---NOT A is T-shirts, and B is socks.
If the price elasticity of supply for a good is equal to infinity, then the
---NOT supply curve is vertical.
If a 15% change in price results in a 20% change in quantity supplied, then the price elasticity of supply is about
1.33, and supply is elastic.
Refer to Figure 5-18. Which supply curve represents perfectly inelastic supply?
S1
Refer to Figure 5-18. Which supply curve is most likely relevant over a very long period of time?
S3
A key determinant of the price elasticity of supply is the time period under consideration. Which of the following statements best explains this fact?
The number of firms in a market tends to be more variable over long periods of time than over short periods of time.
For a particular good, a 10 percent increase in price causes a 15 percent decrease in quantity demanded. Which of the following statements is most likely applicable to this good?
The relevant time horizon is long.
Suppose that two supply curves pass through the same point. One is steep, and the other is flat. Which of the following statements is correct?
The steeper supply curve represents a supply that is inelastic relative to the supply represented by the flatter supply curve.
For a particular good, a 3 percent increase in price causes a 10 percent decrease in quantity demanded. Which of the following statements is most likely applicable to this good?
There are many close substitutes for this good.
Elasticity is
a measure of how much buyers and sellers respond to changes in market conditions.
There are very few, if any, good substitutes for motor oil. Therefore, the
demand for motor oil would tend to be inelastic.
Which of the following is likely to have the most price inelastic demand?
gasoline in the short run
The flatter the demand curve through a given point, the
greater the price elasticity of demand at that point.
The greater the price elasticity of demand, the
greater the responsiveness of quantity demanded to a change in price.
In general, elasticity is a measure of
how much buyers and sellers respond to changes in market conditions.
The supply of a good will be more elastic, the
longer the time period being considered.
When studying how some event or policy affects a market, elasticity provides information on the
magnitude of the effect on the market.
Goods with many close substitutes tend to have
more elastic demands
The price elasticity of demand measures how much
quantity demanded responds to a change in price.
When consumers face rising gasoline prices, they typically
reduce their quantity demanded more in the long run than in the short run.
Which of the following is likely to have the most price inelastic demand?
salt
If the price of walnuts rises, many people would switch from consuming walnuts to consuming pecans. But if the price of salt rises, people would have difficulty purchasing something to use in its place. These examples illustrate the importance of
the availability of close substitutes in determining the price elasticity of demand.
A key determinant of the price elasticity of supply is the
time horizon
Goods with close substitutes tend to have more elastic demands than do goods without close substitutes.
true
If a supply curve is horizontal, then supply is said to be perfectly elastic, and the price elasticity of supply approaches infinity.
true
In general, demand curves for luxuries tend to be price elastic.
true
In general, demand curves for necessities tend to be price elastic.
true
Necessities tend to have inelastic demands, whereas luxuries tend to have elastic demands.
true
Supply is said to be inelastic if the quantity supplied responds substantially to changes in the price and elastic if the quantity supplied responds only slightly to price.
true
Supply tends to be more elastic in the short run and more inelastic in the long run.
true
The demand for Rice Krispies is more elastic than the demand for cereal in general.
true
The demand for soap is more elastic than the demand for Dove soap.
true
The flatter the demand curve that passes through a given point, the more elastic the demand.
true