The Coefficient of Price-Elasticity of Supply for a Product Is

question 354

Multiple Choice

The coefficient of price-elasticity of supply for a product is 2 if

• A)a 1 percent decrease in the price causes a 0.2 percent decrease in quantity supplied.
• B)a 2 percent decrease in price causes a 1 percent decrease in quantity supplied.
• C)a 1 percent decrease in price causes a 2 percent decrease in quantity supplied.
• D)a 2 percent decrease in price causes a 2 percent decrease in quantity supplied.

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Definitions:

Average Revenue

The revenue a firm receives per unit of output sold, calculated by dividing total revenue by the quantity of output.

Demand Curve

A graph showing the relationship between the price of a good and the quantity demanded, holding other factors constant.

Total Revenue

The total receipts or income a firm receives from the sale of its products or services, calculated as the unit price times the quantity sold.

Average Revenue

The amount of income that a company receives per unit of sale, calculated by dividing total revenue by the number of units sold.