Suppose That Price Elasticity of the Long-Run Supply of Restaurant

question 12

Multiple Choice

Suppose that price elasticity of the long-run supply of restaurant meals is 2.5. If the price of meals increases by 5%, how would that affect the supply?

• A) Increase by 12.5%.
• B) Decrease by 12.5%.
• C) Increase by 2.5%.
• D) Decrease by 2.5%.

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Definitions:

Break-even Sales

The amount of revenue required to cover all fixed and variable costs, resulting in no profit or loss.

Northern Division

A geographical or organizational subdivision of a company or entity located in the northern region.

Break-even Sales

The amount of revenue needed to cover total costs, at which point a business neither makes a profit nor incurs a loss.

Overall

Pertaining to the total, aggregate, or general effect, situation, or assessment.