If the Elasticity of Supply Is 4, a 10 Percent

question 305

Multiple Choice

If the elasticity of supply is 4, a 10 percent increase in the price of a good leads to a

• A) 40 percent increase in the quantity of supply.
• B) 4 percent decrease in the quantity demanded.
• C) 2.5 percent increase in the quantity supplied.
• D) 2.5 percent decrease in the quantity demanded.

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Definitions:

Accounts Receivable

Money owed to a business by its customers for goods or services delivered or used but not yet paid for.

Short-Term Notes Receivables

Short-duration financial assets representing amounts owed to a company that must be paid within a year.

Allowance Account

An accounting practice used to create a buffer for potential future losses on receivables, also known as a provision for doubtful debts.

Gross Realizable Value

The estimated selling price of goods minus any costs associated with the completion and sale of those goods.