A Decrease in the Supply of Sugar Increases the Price

question 133

Multiple Choice

A decrease in the supply of sugar increases the price of sugar from $1.00 a packet to $1.25 a packet. The quantity demanded decreases from 100 packets a day to 80 packets a day. The price elasticity of demand for sugar is _______.

• A) 0.5
• B) 0.75
• C) 1.25
• D) 1.0

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Definitions:

Labor

Labor refers to the human effort, both physical and mental, used in the production of goods and services.

Output

The quantity of goods or services produced in a given time period by a firm, industry, or economy.

Cost

Cost pertains to the value of economic resources used in the production of goods or services, often reflected in terms of money expended.

Units

Basic quantities or measurements, such as pieces or portions, used in economic analyses to quantify variables.