Which of the Following Represents a Price Elastic Supply

question 189

Multiple Choice

Which of the following represents a price elastic supply?

• A) The quantity demanded increases 18 percent as a result of a decrease in the price of 8 percent.
• B) The price rises by 8 percent causing the quantity demanded to fall by 10 percent.
• C) The quantity supplied increases by 21 percent as a result of an increase in the price of 12 percent.
• D) The price rises by 22 percent causing the quantity supplied to increase by 3 percent.

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Definitions:

Efficiency Wages

A higher wage paid by employers to increase worker productivity and loyalty, reducing turnover and shirking.

Substitution Effect

The change in quantity demanded of a good due to a change in its price, causing consumers to substitute it with other similar goods.

Labor Supplied

Refers to the total hours that workers are willing and able to work at a given wage rate, in a given time period.

Income Effect

Describes how a change in an individual's income affects their purchasing decisions.