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:

Appreciate

To increase in value or price, often in the context of financial investments or currency valuations.

Current Account Deficit

is a measurement of a country's trade where the value of the goods and services it imports exceeds the value of the products it exports.

Foreign Indebtedness

The total amount of debt a country owes to foreign creditors.

Fixed Exchange Rates

A currency system where the value of a currency is set at a predetermined rate relative to other currencies, instead of fluctuating in the open market.