The Following Data Relate to the Supply Schedule of a Product

question 61

Multiple Choice

The following data relate to the supply schedule of a product. Over which price range is the elasticity of supply greater than 1?

• A) $10 to $15
• B) $15 to $20
• C) $20 to $25
• D) $25 to $30 Over the price range $25 to $30,the change in quantity is (350 - 500)/(300 + 500)= 0.188 and the change in price is (25 - 30)/(25 + 30)= 0.091.Thus,elasticity is 0.188/0.091 = 2.07,which is greater than1.

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Definitions:

Weighted Average Cost

A method of calculating the average cost of inventory or cost of goods sold by weighting each item by its relevance or quantity.

Cost of Equity

The yield a business seeks to determine whether an investment fulfills its requirements for capital returns, frequently calculated through methods such as the Capital Asset Pricing Model (CAPM).

Face Value

The nominal value of a security stated by the issuer.

Cost of Equity

The return that investors expect for investing in a company's equity, reflecting the risk of the investment.