Suppose When the Price of Shoe Laces Goes from $1

question 11

Multiple Choice

Suppose when the price of shoe laces goes from $1 to $2 per pair,production increases from 95 million pairs to 105 million pairs per year.Using the mid-point method,the price elasticity of supply is:

• A) 6.28
• B) 66 percent
• C) 10.5 percent
• D) 0.15

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Definitions:

Rent

A regular payment made by a tenant to an owner for the use of the owner's property or land.

Complementary Resource

An asset or input that increases the utility or productivity of another asset or input when used in conjunction.

Marginal Revenue Product

The additional revenue generated by employing one more unit of a factor of production, such as labor or capital.

Marginal Revenue Product Schedule

A schedule or curve that shows the additional revenue produced by one more unit of an input, such as labor or capital.