Recall the Application About the Short-Run and Long-Run Elasticity of Supply

question 48

Multiple Choice

Recall the Application about the short-run and long-run elasticity of supply of coffee to answer the following question(s) .
-Recall the Application.If the price of coffee beans decreases by 12 percent and stays there for a year,the quantity of coffee supplied will ________ by a relatively ________ amount.

• A) increase; large
• B) increase; small
• C) decrease; large
• D) decrease; small

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Definitions:

Tax Shield

The reduction in income taxes that results from taking an allowable deduction from taxable income, such as mortgage interest, depreciation, or charitable donations.

All Equity

A financial structure where a company is financed entirely through equity without any debt financing.

Leverage

The use of various financial instruments or borrowed capital to increase the potential return of an investment.

Interest Rate

The percentage of a sum of money charged for its use, typically expressed annually, affecting loans, mortgages, and savings.