Final answer:
The price elasticity of supply is not determined by whether the good supplied is a luxury item or not. A Swiffer floor sweeper and a broom would have a positive cross-price elasticity of demand. The short-run elasticity of supply is typically smaller than the long-run elasticity of supply.
Step-by-step explanation:
A. A key consideration as to whether the price elasticity of supply is elastic or inelastic is whether the good supplied is a luxury item. This statement is false. The price elasticity of supply is determined by how easily producers can adjust their quantity supplied in response to a change in price. It is not dependent on whether the good supplied is a luxury item or not.
B. A Swiffer floor sweeper and a broom would have a positive cross-price elasticity of demand. This statement is true. If the cross-price elasticity of demand between two goods is positive, it means that an increase in the price of one good leads to an increase in the demand for the other good.
C. When the price increases, total revenue always increases because of the price effect. This statement is false. The impact of a price increase on total revenue depends on the price elasticity of demand. If the demand is elastic, a price increase will lead to a decrease in total revenue.
D. When supply is perfectly inelastic, a change in demand has no effect on the price. This statement is true. When supply is perfectly inelastic, the quantity supplied does not change regardless of changes in demand, so the price remains unchanged.
E. The short-run elasticity of supply is larger than the long-run elasticity of supply because changes in equilibrium will adjust elasticity accordingly. This statement is false. The short-run elasticity of supply is typically smaller than the long-run elasticity of supply because in the short run, producers have limited time to adjust their production capacity.