Recall the Application About How Changes in Supply Affect the Price

question 105

Multiple Choice

Recall the Application about how changes in supply affect the price of gasoline to answer the following question(s) .
-Recall the Application. Suppose the price elasticity of demand for gasoline is 0.20 and the price elasticity of supply for gasoline is 0.55. If supply decreases by 50 percent, the equilibrium price will increase by

• A) 67 percent.
• B) 70 percent.
• C) 143 percent.
• D) 150 percent.

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Definitions:

Income Distribution

The way in which a nation's total GDP is spread amongst its population.

Collective Bargaining Agreement

A written contract between an employer and a union representing the employees, outlining terms of employment, wages, hours, and working conditions.

Informal Agreement

An understanding or arrangement that is not formally documented but is recognized and respected by those involved.

Terms and Conditions

The set of rules and policies that govern employment contracts, including work hours, salaries, benefits, and job responsibilities.