Suppose a 4 Percent Increase in Price Results in a 2

question 132

Multiple Choice

Suppose a 4 percent increase in price results in a 2 percent increase in the quantity supplied of a good.Calculate the price elasticity of supply and characterize the product.

• A)2; The product is elastic.
• B)0.2; The product is inelastic.
• C)0.5; The product is inelastic.
• D)50%; The product is inelastic.

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Definitions:

Valid Consideration

Something of value exchanged between parties in a contract, which is necessary for the contract to be legally enforceable.

Unilateral Contract

An agreement in which one party makes a promise in exchange for the other party's action but does not require a reciprocal promise to act.

Preexisting Duty Rule

A legal principle that states an existing duty cannot serve as consideration for a new contract, but modifications can occur if additional or new consideration is provided.

Unforeseen Circumstances

situations or events that were not predicted or expected and can significantly impact contracts or agreements.