Suppose the quantity supplied of computers increases from 2 million to 4 million units as the price of a computer increases from $600 to $700. What does the price elasticity of supply equal?
What will be an ideal response?
The price elasticity of supply = (percentage change in the quantity supplied) ÷ (percentage change in the price). Use the midpoint method to calculate the percentages. Thus the percentage change in the quantity supplied = (4,000,000 - 2,000,000 ) ÷ (3,000,000 ) = 66.7 percent and the percentage change in the price is ($700 - $600 ) ÷ ($650 ) = 15.4 percent. Therefore the elasticity of supply equals (66.7 percent) ÷ (15.4 percent) = 4.33.
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A) the horizontal summation of all supply curves for services. B) the sum of all planned production in the economy. C) the stock of all goods in the economy. D) the summation of all product supply curves.
The growth of total railroad mileage
(a) was far greater after the Civil War than before. (b) was maximized in miles built per decade before 1860. (c) was a free-market phenomenon, not subject to government subsidies. (d) was not subject to business cycle fluctuations.
Which of the following is NOT an application of supply and demand analysis?
A) Understanding changing world economic conditions and their effects on prices B) Evaluating the effects of government price controls on the agricultural industry C) Determining how taxes affect aggregate consumption spending patterns D) all of the above E) none of the above
Higher the economic freedom in a country, _____
a. lower is the standard of living of the people b. higher is the life expectancy of the people c. greater is the bureaucratic freedom and red-tapism d. lower is the level of access to education due to lack of government schools e. lower is the literacy rate