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:

Marginal Utility

The additional satisfaction or utility gained from consuming an additional unit of a good or service.

Utility Per Dollar

Represents the amount of satisfaction or pleasure received per unit of expenditure.

Good

A tangible or intangible product that can satisfy a need or desire, and is transferable from one person to another.

Budget Constraint

The limits imposed on household choices by income, wealth, and product prices.