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:

Finished Goods Inventory

An end item ready to be sold, but still an asset on the company’s books.

Raw Materials

Basic materials that are processed or refined to create a final product in manufacturing.

Monthly Sales

The total revenue or number of units sold by a business during a calendar month.

Supply Chain Costs

Expenses incurred in the production and distribution process of goods, from raw materials to final delivery to the consumer.