Price elasticities of supply are always:
a. the same as price elasticities of demand.
b. negative numbers.
c. positive numbers.
d. greater than one.
e. increased when a tax is imposed.
QUESTION 2The market price for wallets is 20 . Your technology is such that at your most efficient production point, the average total cost of producing a wallet is 2.50 . Your manager runs into your office and shouts, Boss Average costs are rising Average costs are rising To make a profit-maximizing decision, you should:
a. d or e.
b. immediately stop production.
c. completely ignore your manager.
d. ask the manager about the marginal cost.
e. ask the manager about the average total cost.
QUESTION 3Suppose that when price is 10, quantity supplied is 20 . When price is 6, quantity supplied is 12 units. The price elasticity of supply is:
a. 0.5.
b. 0.8.
c. 1.0.
d. 1.5.
e. 2.0.
QUESTION 4If the market price is 5 and you are currently producing at a level where average total cost is 3 and falling, you should:
a. b or c, it doesn't matter.
b. shut down.
c. produce only enough to cover variable costs.
d. produce where MR = MC.
e. produce until the average total cost and average revenue are equal.
QUESTION 5The responsiveness of suppliers to changing prices is called the:
a. cross elasticity.
b. supply elasticity.
c. supply period.
d. long-run.
e. market-day.
QUESTION 6Suppose that you have returned from your fishing expedition with 20,000 fish. The market price is 3 per fish. Your average fixed cost was 1 and your total variable cost was 5,000 . If the price jumps to 3.50 before you sell your first fish, how much extra profit, if any, do you earn?
a. 10,000.
b. 25,000.
c. 30,000.
d. 45,000.
e. 70,000.
QUESTION 7If the price elasticity of supply equals zero, this implies that:
a. suppliers can easily change the quantity supplied of the product as the price of the product changes.
b. the period under consideration is a very long-run time period.
c. the supply curve is perfectly vertical.
d. the percentage change in quantity supplied exceeds the percentage change in product price.
e. the percentage change in quantity supplied equals the percentage change in product price.
Quick Reply
