Y10 Economics - C12 Price Elasticity of Supply

What does Price Elasticity of Supply (PES) measure?

• The total supply of a product

• The demand for a product

• The cost of production

• The responsiveness of quantity supplied to price changes

When is supply considered price elastic?

• When supply decreases with price increase

• When supply cannot change at all

• When producers can easily increase supply without delay

• When supply is always constant

What happens to supply when PES is less than 1?

• Supply is inelastic

• Supply is elastic

• Supply is perfectly elastic

• Supply is perfectly inelastic

What does a PES value of 0 indicate?

• Perfectly price elastic supply

• Perfectly price inelastic supply

• High responsiveness to price changes

• Unitary price elasticity

If the PES value is equal to infinity, what does it mean?

• Supply is not affected by price

• Supply is unitary elastic

• Supply is perfectly inelastic

• Supply is perfectly price elastic

Which of the following is a determinant of PES?

• The degree of spare production capacity

• The total market demand

• The price of substitutes

• The level of consumer income

How does the time period affect PES?

• Short run limits output changes

• Long run has no effect

• Only short run affects demand

• Time has no impact on supply

What is the significance of PES for decision makers?

• To analyze market competition

• To set prices for products

• To determine consumer preferences

• To plan and create spare capacity

What happens when a firm has a high level of stocks?

• Supply is less price elastic

• Supply is more price elastic

• Supply decreases

• Supply remains unchanged

Which example illustrates price inelastic supply?

• A $1 price drop on grapes causing a 50 supply decrease

• A $2 price hike on oranges causing a 200 supply increase

• A $1 price hike on bananas causing a 100,000 supply increase

• A $1 price hike on apples causing a 100 supply increase