Figure: Price Elasticity of Supply Refer to the Figure

question 247

Multiple Choice

Figure: Price Elasticity of Supply Refer to the figure. Compared to S₁, S₂ is more:

• A) elastic since quantity supplied increases more with an increase in price.
• B) elastic since quantity supplied increases less with an increase in price.
• C) inelastic since quantity supplied increases more with an increase in price.
• D) inelastic since quantity supplied increases less with an increase in price.

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Definitions:

Fixed Assets

Long-term tangible assets used in the operation of a business and not expected to be converted to cash in the near term.

Operating Capacity

The maximum output a company can produce using its current resources without compromising quality or efficiency.

Sales Projection

An estimate of the sales revenue that a company expects to achieve in a future period.

Retained Earnings

Profits that a company has kept or retained rather than distributed to shareholders in the form of dividends.