If the Supply Curve for a Product Is Horizontal, Then

question 5

Multiple Choice

If the supply curve for a product is horizontal, then the elasticity of supply is:

• A) equal to infinity.
• B) greater than 1 but less than infinity.
• C) equal to 1.
• D) equal to zero.

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Definitions:

Differential Effect

It is the financial impact of a business decision that differentiates between alternative choices, highlighting the relative costs or benefits.

Book Value

The net value of a company's assets minus its liabilities, as recorded on the balance sheet, often used to calculate the value of a company if it were to be liquidated.

Opportunity Cost

The price paid when one opts not to pursue the next most favorable choice during decision-making.

Cash Outlay

The actual amount of money spent or disbursed on goods, services, or assets.