A Price Elasticity of Supply of 1

question 114

Multiple Choice

A price elasticity of supply of 1.5 implies that

• A)a 20 percent increase in the quantity supplied increases the price by 30 percent.
• B)total revenue is 1.5 times total cost.
• C)a 20 percent increase in the price increases the quantity supplied by 30 percent.
• D)a 20-unit increase in supply reduces the price by $30.
• E)a $20 increase in the price increases the quantity supplied by 30 units.

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Definitions:

Maximizing Profits

The process of increasing the difference between the revenue generated and the costs incurred by a business.

Economic Conditions

The state of the economy at a given time, influenced by factors like inflation rates, unemployment levels, GDP growth, and market demand.

Inflation

The rate at which the general level of prices for goods and services is rising, eroding purchasing power.

Gross Domestic Product

A measure of the economic output of a country, calculated as the total value of all goods and services produced over a specific time period.