1. A firm is operating at 90% capacity. When the market price for their product rises and they want to increase QS, ………. 1.They will be able to respond because their S will be relatively elastic 2.They will not be able to respond very much because their S will be relatively inelastic

2. The firm has 3 months worth of production held in inventory. The market price has increased. 1.The firm will respond by increasing S – simply by bringing the inventory to market 2.The firm has a relatively elastic Supply 3.Neither 1 or 2 4.Both 1 and 2

3. --Firm A makes cookies. They can easily change from one brand of flour to another. --Firm B makes a special diet cookie that must use a only Brand X flour. 1.Both firms have elastic S curves 2.Neither firm has an elastic S curve 3.Firm A- inelastic S curve 4.Firm B – elastic S curve 5.Firm A – elastic S ; Firm B – inelastic S

4. Which scenario would create an inelastic S curve? 1.A firm was able to convince its highly skilled workers to move to the west coast to build a new production facility 2.An accounting firm has very little physical capital besides its office furniture. There was a significant increase in demand for accountants in Europe 3.Both 1 and 2 would result in elastic S curves 4.Both 1 and 2 would result in inelastic S curves

5. Determinants of PES Spare capacity Inventory Ease of Factor Substitution Mobility of Capital and Labor

6. PES and Total Revenue have no relation