If Output in the Calculator Market Increases by 5 Percent

question 18

Multiple Choice

If output in the calculator market increases by 5 percent when the price increases by more than 5 percent, then

• A)supply is inelastic
• B)supply is elastic
• C)a small increase in price will cause a leftward shift of the supply curve
• D)a small increase in price will cause a rightward shift of the supply curve
• E)a large increase in price will cause a large shift of the supply curve

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Definitions:

Manufacturing Firms

Companies engaged in the industrial process of converting raw materials into finished products through human labor and machinery.

Disposable Income

The disposable income households have for expenditures and savings, post-income taxation.

C + I

A formula component in macroeconomics representing total private consumption (C) plus total private investment (I).

MPS

The marginal propensity to save, which is the fraction of an additional unit of income that is saved rather than spent.