Suppose That Two Supply Curves Pass Through the Same Point

question 64

Multiple Choice

Suppose that two supply curves pass through the same point.One is steep,and the other is flat.Which of the following statements is correct?

• A)The flatter supply curve represents a supply that is inelastic relative to the supply represented by the steeper supply curve.
• B)The steeper supply curve represents a supply that is inelastic relative to the supply represented by the flatter supply curve.
• C)Given two prices with which to calculate the price elasticity of supply,that elasticity would be the same for both curves.
• D)A decrease in demand will increase total revenue if the steeper supply curve is relevant,while a decrease in demand will decrease total revenue if the flatter supply cure is relevant.

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Definitions:

Fair Value

An estimate of the market value of an asset or liability, based on current conditions and agreed upon by both buyer and seller.

Goodwill

Goodwill is an intangible asset that arises when a company acquires another company for a premium value, representing elements such as brand reputation, customer relations, and intellectual property.

Acquisition

Gaining control over a different corporation through the acquisition or trade of shares.

Bargain Purchase

Occurs when a company acquires an asset at a price significantly below its fair market value.