If a 30 Percent Change in Price Causes a 10

question 172

Multiple Choice

If a 30 percent change in price causes a 10 percent change in quantity supplied,what do we know about the price elasticity of supply

• A)It is 1/3 and supply is elastic.
• B)It is 1/3 and supply is inelastic.
• C)It is 1 and supply is unit elastic.
• D)It is 3 and supply is elastic.

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Definitions:

Discount Rate

The interest rate used to determine the present value of future cash flows in discounted cash flow analysis, reflecting the time value of money.

Initial Investment

The amount of money used to start a project, purchase an asset, or invest in a business venture.

Marginal Cost

The cost incurred by producing one additional unit of a product or service.

Fixed Costs

Fixed costs refer to expenses that do not change with the level of production or output over the short term, such as rent, salaries, and insurance premiums.