A Decrease in Supply Will Cause the Smallest Increase in Price

question 33

Multiple Choice

A decrease in supply will cause the smallest increase in price when

• A)both supply and demand are inelastic.
• B)demand is elastic and supply is inelastic.
• C)both supply and demand are elastic.
• D)demand is inelastic and supply is elastic.

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Definitions:

Compensable Factors

Elements of a job that are used to determine its value and appropriate compensation, such as skill level, effort, responsibility, and working conditions.

Two-Tier Wage System

A salary structure where workers performing the same job or function are paid differently based on certain criteria, typically involving new hires being paid less than more senior employees.

Equity

Equity refers to fairness or justice in the way people are treated. In financial contexts, it also represents the ownership interest of shareholders in a corporation.

Equity Theory

A theory in social psychology that explains how individuals gauge the fairness of their work outcomes and inputs relative to others.