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:

Long Run

A period during which all factors of production and costs are variable, and firms can enter or exit the industry.

Total Revenue

The gross revenue from selling products or services before deducting any costs.

Fixed Cost

Expenditures that do not change with the level of production or sales, such as rent, salaries, and insurance.

Total Cost

the complete cost of production including both fixed and variable costs.