Scenario 5-1 Suppose That the Supply of Aged Cheddar Cheese Is Inelastic

question 172

Multiple Choice

Scenario 5-1
Suppose that the supply of aged cheddar cheese is inelastic, and the supply of bread is elastic. Both goods are considered to be normal goods by a majority of consumers. Suppose that a large income tax increase decreases the demand for both goods by 10%.
-Refer to Scenario 5-1.The price elasticity of supply for bread could be

• A) -1.
• B) 0.
• C) 0.5.
• D) 1.5.

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Definitions:

Capital Goods

Long-lasting goods used in the production of other goods or services, such as machinery, buildings, and equipment.

Consumer Goods

Products that are purchased for consumption by the average consumer.

Capital Goods

Long-lasting goods that are used in the production of other goods or services, such as buildings, machinery, and equipment.

Consumer Goods

Products that are sold directly to consumers for their personal or household use, typically including items like electronics, appliances, and clothing.