Suppose That the Percentage Change in Supply Is 20%, the Price

question 229

Multiple Choice

Suppose that the percentage change in supply is 20%, the price elasticity of supply is 2, and the percentage change in the equilibrium price is 4%. What is the price elasticity of demand?

• A) 0
• B) 1
• C) 2
• D) 3

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Definitions:

Pollution

The contamination of the natural environment with harmful substances or energies resulting in adverse effects on living organisms and ecosystems.

Tradable Emissions Permits

A system in which companies are allocated permits that allow them to emit a certain level of pollutants, with the option to buy, sell, or trade permits with other companies.

Equilibrium Price

The price at which the quantity of goods supplied is equal to the quantity of goods demanded in the market, leading to market balance.

Equilibrium Quantity

Equilibrium quantity is the quantity of goods or services supplied and demanded at the equilibrium price, where the quantity supplied equals the quantity demanded in a market.