If an Increase in the Supply of a Product Results

question 59

Multiple Choice

If an increase in the supply of a product results in a decrease in the price,but no change in the actual quantity of the product exchanged,then the:

• A) price elasticity of supply is zero.
• B) price elasticity of supply is infinite.
• C) price elasticity of demand is unitary.
• D) price elasticity of demand is zero.

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Definitions:

Profit

The financial gain made in a transaction or operation, calculated as the difference between revenue and expenses.

Total Fixed Cost

The sum of all costs required to produce the first unit of a product which do not change with the volume of output.

Zero Output

A scenario in production where no goods or services are produced, often due to complete shutdown of operations.

Purely Competitive Market

An economic setting where numerous purchasers and vendors exist, offering identical products, with free entry and exit in the market.