Elasticity of Supply - SS1 Economics Past Questions & Answers - page 1

1

What is the elasticity of supply?

A

 The degree of responsiveness of the quantity of a good demanded to changes in its price.

B

The degree of responsiveness of the quantity of a good supplied to changes in its price.

C

The degree of responsiveness of the quantity of a good demanded to changes in its income.

D

The degree of responsiveness of the quantity of a good supplied to changes in its income.

 

CORRECT OPTION: b
2

What happens to the elasticity of supply when a producer has more time to adjust to changes in price?

A

It becomes more inelastic.

 

B

It becomes more elastic.

C

It stays the same.

D

It depends on the type of good being produced.

CORRECT OPTION: b
3

What factors influence the elasticity of supply?

A

The level of demand, the availability of raw materials, and the price of the good.

 

B

The level of technology, the availability of raw materials, and the time frame being considered.

C

The level of competition, the price of substitutes, and the level of income of consumers.

D

The level of advertising, the level of government regulation, and the price of complementary goods.

CORRECT OPTION: b
4

When the quantity supplied of a good is highly responsive to changes in its price, we say that the good has:

A

Inelastic supply.

 

B

Unitary supply.

C

Elastic supply.

D

No supply.

CORRECT OPTION: c
5

What is the difference between elastic and inelastic supply?

 

Elastic supply means that a small change in price leads to a relatively large change in quantity supplied. In other words, suppliers are very responsive to changes in price. Inelastic supply, on the other hand, means that a change in price leads to a relatively small change in the quantity supplied. In other words, suppliers are not very responsive to changes in price.

6

What are some factors that influence the elasticity of supply?

Several factors can influence the elasticity of supply, including:

  • Time: Over time, suppliers may be able to adjust their production processes or expand their capacity, making their supply more elastic in the long run.

  • Availability of inputs: If suppliers rely on inputs that are difficult to obtain or expensive, their supply may be less elastic because they cannot easily ramp up production.

  • Level of technology: Suppliers who have access to advanced technology may be able to increase their supply more easily, making their supply more elastic.

  • The number of producers: In a market with many producers, each supplier may have less influence over the market price, making their supply more elastic.

  • Spare capacity: If suppliers have unused capacity, they can increase their supply quickly and easily.

 

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