Suppose That After a 10 Per Cent Increase in the Price

question 82

Multiple Choice

Suppose that after a 10 per cent increase in the price of timber, a forestry-company increases its supply of timber by four per cent in the next three months, and eight per cent by 12 months. This means that the elasticity of supply is _____.

• A) 0.4 at three months and 0.8 at 12 months
• B) 0.8 at three months and 0.4 at 12 months
• C) 2.5 at three months and 1.25 at 12 months
• D) 1.25 at three months and 2.5 at 12 months

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