Suppose That as the Price of Some Product Increases from $4.00

question 19

Multiple Choice

Suppose that as the price of some product increases from $4.00 to $5.00 per unit the quantity supplied rises from 500 to 1000 units per month.The price elasticity of supply for this product is

• A)0.33.
• B)2.0.
• C)2.5.
• D)3.0.
• E)1.0.

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Definitions:

Transfer Price

The price at which divisions of a company transact with each other, such as the trade of supplies or labor between departments.

Operating Income

The profit earned from a firm's normal core business operations, excluding deductions of interest and tax.

Unused Capacity

The portion of a company's resources or assets that remains unutilized or underutilized, not contributing to production or output.

Return on Investment

A measure of the financial gain or loss on an investment relative to the amount of money invested, expressed as a percentage.