Elasticity in Economics Quiz

What does a PES value of 1 signify?

• Perfectly elastic supply

• Perfectly inelastic supply

• Unit elastic supply

• Infinite elasticity

What does a PES equal to 1 signify?

• Perfectly elastic

• Elastic

• Unit elastic

• Inelastic

What does a steep upward sloping supply curve indicate about elasticity?

• Perfectly elastic

• Elastic

• Unit elastic

• Inelastic

If a supply curve is perfectly inelastic, what is the PES value?

• 0

• 1

• Greater than 1

• Infinity

What type of supply elasticity is indicated by a horizontal supply curve?

• Perfectly inelastic

• Elastic

• Unit elastic

• Perfectly elastic

What is the characteristic of a unit elastic supply curve?

• PES = 0

• PES = 1

• PES > 1

• PES = ∞

What is a key factor affecting a firm's ability to respond to price changes?

• Brand reputation

• Availability of spare capacity

• Customer loyalty

• Market competition

What is an example of a firm with limited spare capacity?

• A bakery with full ovens

• A factory with idle machines

• A store with excess stock

• A company with surplus employees

How does the ability to switch production affect a firm's response to change?

• It limits the firm's options

• It increases the firm's scope to respond

• It decreases production costs

• It reduces the quality of goods

What is the relationship between time and price elasticity of supply?

• Elasticity is greater in the short term

• Elasticity is greater in the long term

• Time has no effect on elasticity

• Elasticity decreases over time