Practise defining, calculating and interpreting PES and explaining how time, spare capacity, stocks, factor mobility and production constraints affect firms' output response.
What is price elasticity of supply?
the change in the quantity supplied when a price changes
the change in the quantity supplied when demand changes
the comparison of the proportionate change in supply to the proportionate change in demand
the comparison of the proportionate change in supply to the proportionate change in price
A firm is producing 100 units at a price of $ 10. The price elasticity of supply is 0.5 and the price is raised to $ 12.
What is the new level of output?
75
110
125
150
The diagram shows the supply curve of a product.
The government imposes a specific indirect tax of $5 on the product.
How will the price elasticity of supply of the product change?
from elastic (>1) to inelastic (<1)
from inelastic (<1) to elastic (>1)
from inelastic (<1) to unitary (=1)
from unitary (=1) to elastic (>1)