At a Price of $10 Per Unit, Gadgets Inc

question 94

Multiple Choice

At a price of $10 per unit, Gadgets Inc. is willing to supply 14,000 gadgets, while United Gadgets is willing to supply 11,000 gadgets. If the price were to rise to $14 per unit, their respective quantities supplied would rise to 16,000 and 15,000. If these are the only two firms supplying gadgets, what is the elasticity of supply in the market for gadgets?

• A)0.64
• B)0.8
• C)1.12
• D)1.56

---

Definitions:

Market Shares

The portion of a market controlled by a particular company or product, typically expressed as a percentage of the total market.

Four-Firm Concentration Ratio

An economic measure that assesses the concentration of business within an industry, represented by the combined market share of the four largest firms.

Effective Cartel

An organization of producers that agree to coordinate prices and production to monopolize a market or maximize collective profits.

Pure Monopoly

A market structure where a single seller dominates the market, there are no close substitutes for the product, and barriers to entry are high, preventing competition.