Relative to a Mobile Factor of Production, Economic Theory Suggests

question 70

Multiple Choice

Relative to a mobile factor of production, economic theory suggests that the price elasticity of supply for a highly immobile factor of production (for example, land) will be

• A) more elastic.
• B) less elastic.
• C) of unitary elasticity.
• D) this is a trick question; the price elasticity of supply for factors of production is not affected by factor mobility.

---

Definitions:

Specific Assets

Assets that are designated for a particular use or service within a business, often tailored to particular operational requirements.

Appreciation

The increase in the value of an asset over time, which can affect investments, real estate, and other properties due to a variety of factors such as demand and inflation.

Default Risk

The risk that a borrower will not make the required payments on their debt obligations.

U.S. Treasury Bonds

Long-term government debt securities issued by the United States Department of the Treasury with maturity periods over 20 years, offering a fixed interest rate.