Firm a and Firm B Produce the Same Goods but with Different

question 111

Multiple Choice

Firm A and Firm B produce the same goods but with different inputs.If the inputs used by Firm A are more easily available than the inputs used by Firm B,then which of the following statements is true?

• A) The elasticity of supply of Firm A and Firm B will be equal.
• B) The elasticity of supply of Firm A will be higher than the elasticity of supply of Firm B.
• C) The elasticity of supply of Firm A will be lower than the elasticity of supply of Firm B.
• D) The elasticity of supply of Firm A and Firm B cannot be compared without information on price change.

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Definitions:

Fair Market Value

The estimated price at which an asset would sell in the marketplace when both buyer and seller are reasonably knowledgeable and willing parties.

Accountant

A professional who performs accounting functions such as audits or financial statement analysis. Accountants can also advise on financial strategies and tax planning.

Gross Income

The total income earned by an individual or a business before any deductions or taxes are taken out.

Political Subdivision

An administrative division of a country that is granted certain powers and responsibilities by legislation, such as a city, county, or district.