If the Price Elasticity of Supply Is 1

question 55

Multiple Choice

If the price elasticity of supply is 1.5,and a price increase led to a 3% increase in quantity supplied,then the price increase is about

• A)0.2%.
• B)0.5%.
• C)2.0%.
• D)4.5%.

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Definitions:

Net Operating Income

A measure of a company's profitability calculated as total revenue minus operating expenses, excluding interest and taxes.

Contribution Approach

A method of income statement presentation that separates fixed costs from variable costs, facilitating operational decision-making.

Cost Formula

An equation used to predict costs at different levels of activity. It often incorporates fixed costs, variable rate per unit of activity, and the total cost.

Administrative Expenses

Overhead or operating expenses associated with the day-to-day operations of a business, excluding production costs.