Elasticity of Supply - SS1 Economics Past Questions and Answers - page 1
What is the elasticity of supply?
The degree of responsiveness of the quantity of a good demanded to changes in its price.
The degree of responsiveness of the quantity of a good supplied to changes in its price.
The degree of responsiveness of the quantity of a good demanded to changes in its income.
The degree of responsiveness of the quantity of a good supplied to changes in its income.
What happens to the elasticity of supply when a producer has more time to adjust to changes in price?
It becomes more inelastic.
It becomes more elastic.
It stays the same.
It depends on the type of good being produced.
What factors influence the elasticity of supply?
The level of demand, the availability of raw materials, and the price of the good.
The level of technology, the availability of raw materials, and the time frame being considered.
The level of competition, the price of substitutes, and the level of income of consumers.
The level of advertising, the level of government regulation, and the price of complementary goods.
When the quantity supplied of a good is highly responsive to changes in its price, we say that the good has:
Inelastic supply.
Unitary supply.
Elastic supply.
No supply.
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.
What are some factors that influence the elasticity of supply?
Several factors can influence the elasticity of supply, including:
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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.
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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.
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Level of technology: Suppliers who have access to advanced technology may be able to increase their supply more easily, making their supply more elastic.
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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.
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Spare capacity: If suppliers have unused capacity, they can increase their supply quickly and easily.