PES - Part 2 Plenary

What does Price Elasticity of Supply (PES) measure?

• How demand changes when price changes

• How supply changes when price changes

• How consumer preferences affect supply

• How government policies affect demand

If the supply of a product is elastic, what does this mean?

• Producers cannot change the quantity supplied even if the price changes

• Consumers will buy less if the price increases

• Producers can easily increase or decrease the quantity supplied when the price changes

• The government must intervene to control supply

If the supply of a product is inelastic, what is likely to happen if demand increases?

• Prices will fall

• Producers will increase supply immediately

• Consumers will stop buying the product

• Prices will rise significantly

How can knowledge of PES help consumers?

• It helps them predict future price changes

• It encourages them to always buy in bulk

• It ensures they pay the lowest price possible

• It helps them influence government policies

Why might a producer invest in new technology?

• To reduce the price elasticity of demand

• To avoid paying taxes

• To make supply more elastic and respond to price changes

• To increase consumer preferences for their product

If the supply of a good is inelastic, what might the government do to ensure sufficient supply?

• Rely on market forces to stabilize supply

• Provide subsidies to producers

• Impose higher taxes on the good

• Encourage consumers to buy less

Which of the following is most likely to have an elastic supply?

• Agricultural products (e.g., wheat)

• Handmade crafts

• Factory-produced goods (e.g., smartphones)

• Rare antiques

Which of the following is most likely to have an inelastic supply?

• Luxury cars

• Fresh fruits

• Mass-produced clothing

• Oil in the short term

If the government imposes a tax on a good with inelastic supply, what is likely to happen?

• The quantity supplied will increase

• The quantity supplied will decrease significantly

• The quantity supplied will remain almost the same

• Consumers will stop buying the good

Why is supply often more elastic in the long term than in the short term?

• Producers have more time to adjust their production levels

• Consumers change their preferences over time

• Governments introduce new policies in the long term

• Prices tend to fall in the long term