The Price Elasticity of Supply Refers To

question 66

Multiple Choice

The price elasticity of supply refers to:

• A) a change in the supply of one good when prices in the economy change.
• B) the substitution of one productive activity for another based on price changes that favor the production of certain goods.
• C) the responsiveness of suppliers to changes in economic variables, except price.
• D) the percentage change in the quantity supplied of one good resulting from a 1-percent increase in the price of that good.

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Definitions:

Firms

business organizations engaged in the production and sale of goods and services, operating with the motive of earning profits.

Opportunity Cost

The cost of forgoing the next best alternative when making a decision or choosing a particular action.

Labor Resource

Human work effort, both physical and mental, utilized in the creation of goods and services.

Linear Production

A production process in which outputs are directly proportional to inputs, with a constant rate of output per unit of input.