Define the elasticity of supply and show how it is calculated
What will be an ideal response?
The elasticity of supply measures the responsiveness of the quantity supplied to a change in the price of a good when all other influences on selling plans remain the same. The elasticity of supply is calculated by the percentage change in the quantity supplied divided by the percentage change in the price.
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If a worker receives 6 percent higher nominal wages over a year in which inflation is 2 percent, the worker's real wages have
A) risen by 8 percent. B) risen by 4 percent. C) risen by 3 percent. D) fallen by 3 percent. E) fallen by 4 percent.
Wendy retails motor homes, which she buys for a sum that does not vary with the number she purchases from the manufacturer. She can sell 11 per week at $40,000. If she limits sales to 10, she can charge $41,000 each. She will sell 11 per week if the cost of each vehicle is no more than
A. $20,000. B. $30,000. C. $40,000. D. $41,000.
A decrease in taxes
a. increases GDP as much as a decrease in government purchases b. increases GDP less than an equal increase in government purchases c. decreases GDP more than an equal decrease in government purchases d. changes GDP but in an unpredictable way because some people consume more than others and others save more than some e. increases consumption but has no effect on GDP
Unemployment compensation programs are called automatic stabilizers because payments increase during
A. both recessions and expansions. B. expansionary periods. C. periods of high unemployment. D. wartime only.