Copy link:
Copy

Assume that the supply of coffee can be given by the following equation: Q = 3P +5. What can we say about supply?
The supply curve is downward sloping
The supply curve is vertical
The suply curve is upward sloping

Assume that the supply of coffee can be given by the following equation: Q = 2P +5. Assume that the price rises from P = 2 to P = 3. What would the price elasticity of supply equal? Clue - substitute price into supply equation, work out Z and then use the formula for PES = (% changeQ) / (% change in P)
Between 0 and 1/5
Between 3/9 and 5/9
Between 1/2 and 1

Assume that both supply of and demand for tea increase. However supply increases by 3 times as much as demand. What will happen to the price and quantity of tea in the new equilibrium?
Prices will fall and quantity produced will reduce.
Prices will rise and quantity produced will fall.
Prices will fall and quantity produced will increase.

In the diagram below, what will imports be after demand has risen? Note that Sw = world supply and S = domestic supply. Assume all lines are straight!
UY
VX
XY
VY

In the diagram below, imagine that S is a stright line supply curve going through the origin. What is the PES?
We do not know. We need more data.
It is equal to 0
It is different at every point.
It is equal to 1 at alll points.

In country A, health is provided by the public sector and is not run for profitable purposes. What shape is the supply curve?
Horizontal
Vertical
Upward sloping and through the origin
We do not know.

Copy link:
Copy

Authored by:

Experienced teacher of micro- and macro-economics

Tests Created: 11

  • 14 Followers
  • Send message
Discussion
Your Facebook Friends on WizIQ