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Suppose an Increase in World Demand for Potash (Used in the Production

question 71

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Suppose an increase in world demand for potash (used in the production of fertilizer) increases the price from $285 per tonne to $315 per tonne.Annual Canadian production increases from 15 million tonnes to 17 million tonnes.What is the elasticity of supply of Canadian potash?


Definitions:

Stockholders' Equity

The residual interest in the assets of a corporation after deducting liabilities, representing the ownership interest of shareholders.

Book Value Per Share

A measure used to gauge a company's financial health, calculated by dividing total shareholder's equity minus preferred equity by the number of outstanding common shares.

Stock Dividend

A payment made to shareholders in the form of additional shares, rather than cash, reflecting the company's decision to reinvest the profit.

Liability

A company's legal financial debts or obligations that arise during the course of business operations.

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