Suppose a Decrease in Demand Causes the Price to Decrease

question 185

Multiple Choice

Suppose a decrease in demand causes the price to decrease from $4 to $3 and the quantity to decrease from 1,000 to 700.Using the midpoint method,the elasticity of supply equals

• A) 0.81.
• B) 1.24.
• C) 2.83.
• D) 0.18.
• E) None of the above answers is correct.

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Definitions:

Ending Inventory

The total value of all goods still available for sale at the end of an accounting period.

Beginning Inventory

The amount of inventory a company has at the start of an accounting period.

Markup

The sum added onto the purchase price of products to encompass both overhead expenses and profit margins.

Average Inventory

The mean amount of inventory held by a business over a specific period of time, calculated to assess inventory management efficiency.