If a 5 Percent Increase in Price Results in a 3

question 221

Multiple Choice

If a 5 percent increase in price results in a 3 percent increase in the quantity supplied, the elasticity of supply is

• A) 0.30.
• B) 0.60.
• C) 1.20.
• D) 1.66.

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Definitions:

Variance

A statistical measure of the distribution of data points in a data set, indicating how far each data point is from the mean.

Downside Risk

The potential loss in value of an investment, indicating the estimate of the extent to which an asset or security could decrease in value.

Conversion Premium

The extra amount an investor pays to convert a convertible security into a specified number of shares of common stock, above its current market value.

Conversion Price

The predetermined price at which convertible securities can be exchanged for a specified number of common shares.