Suppose the Price Elasticity of Supply for Cheese Is 0

question 16

Multiple Choice

Suppose the price elasticity of supply for cheese is 0.6 in the short run and 1.4 in the long run.If an increase in the demand for cheese causes the price of cheese to increase by 15%,then the quantity supplied of cheese will increase by

• A)0.4% in the short run and 4.6% in the long run.
• B)1.7% in the short run and 0.7% in the long run.
• C)9% in the short run and 21% in the long run.
• D)25% in the short run and 10.7% in the long run.

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Definitions:

Actual Operations

The real activities and processes conducted by a business in producing its goods or services, as opposed to theoretical planning.

Planned Results

The expected outcomes or objectives set by a business or project before the commencement of activities, often used as a basis for performance evaluation.

Favorable Results

Outcomes that are positive or beneficial, usually exceeding expectations.

Management by Exception

A management strategy where only significant deviations from planned results are brought to the attention of management.