Suppose the Price Elasticity of Supply for Candles Is 0

question 287

Multiple Choice

Suppose the price elasticity of supply for candles is 0.3 in the short run and 1.2 in the long run.If an increase in the demand for candles causes the price of candles to increase by 36%,then the quantity supplied of candles will increase by about

• A) 0.8% in the short run and 3.3% in the long run.
• B) 1.2% in the short run and 0.3% in the long run.
• C) 10.8% in the short run and 43.2% in the long run.
• D) 120% in the short run and 30% in the long run.

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Definitions:

Responsibility Accounting

A system of accounting that segments financial information by areas of responsibility, allowing managers to be held accountable for their areas' financial performance.

Managers

Managers are individuals in an organization responsible for directing and overseeing the work of a group of people towards the achievement of goals.

Residual Income

The income that exceeds the minimum rate of return, often used as a measure of the performance of investment centers within organizations.

Net Operating Income

Profit generated from a company's normal business operations, excluding deductions of interest and taxes.