Choose the correct answer for each question.

1. A firm estimates that its price elasticity of supply is + 0.8. Its current level of output is 20,000 units per month. Following a price increase of 10%, we would expect total output to rise to

   1.   ?    21500 units
   2.   ?    21600 units
   3.   ?    22000 units
   4.   ?    22600 units

2. The supply of a good to a market is likely to be more elastic when

   1.   ?    Producers are operating close to full capacity
   2.   ?    Stock levels are low
   3.   ?    The time period required for production is small
   4.   ?    Factor inputs cannot be substituted between alternative uses

3. The diagram below shows an outward shift in the market demand for a product
   
   
   
   The price elasticity of supply comparing the original and new equilibrium market price and output is estimated to be

   1.   ?    0.5
   2.   ?    1.0
   3.   ?    1.5
   4.   ?    2.0

4. 
   In the diagram shown above, the supplier has a

   1.   ?    perfectly inelastic supply curve
   2.   ?    perfectly inelastic demand curve
   3.   ?    perfectly elastic supply curve
   4.   ?    perfectly elastic demand curve

5. A product is found to have a price elasticity of supply of + 2.0 If its price falls from £2.00 to £1.50, its supply will

   1.   ?    decrease by 25%
   2.   ?    decrease by 50%
   3.   ?    increase by 10%
   4.   ?    increase by 50%

6. Which of the supply curves illustrated below (A, B, C or D) has an price elasticity of supply greater than +1?
   
   

   1.   ?    A
   2.   ?    B
   3.   ?    C
   4.   ?    D