If the Price Elasticity of Supply Is 0

question 18

Multiple Choice

If the price elasticity of supply is 0.75, then when the price of Good Y falls by 10 percent:

• A) the quantity supplied of Good X rises by 7.5 percent.
• B) the quantity supplied of Good X rises by 133 percent.
• C) the quantity supplied of Good X falls by 7.5 percent.
• D) the quantity supplied of Good X falls by 133 percent.

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Definitions:

Resource Prices

The costs associated with acquiring inputs needed for production, including raw materials, labor, and capital.

Decline

A decrease in the quantity, quality, or level of something over time.

Constant-Cost Industry

An industry in which the cost of production does not change as the industry's output changes.

Long-Run Supply Curve

A graphical representation showing the relationship between the price of a good and the quantity supplied over a period long enough for firms to enter or exit the market.