Refer to the Figure Below

question 9

Multiple Choice

Refer to the figure below. What is the price elasticity of supply at point A?

• A)4
• B)2
• C)1
• D)1/2

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Definitions:

Average Product

The output per unit of input, calculated by dividing total output by the quantity of inputs used.

Production Possibilities

Different combinations of goods and services that an economy can produce efficiently with its available resources and technology.

Diminishing Returns

The principle stating that as investment in a particular area increases, the rate of profit from that investment, after a certain point, cannot continue to increase if other variables remain constant.

Marginal Product

The increase in output resulting from a one-unit increase in the input of a production factor, holding all other inputs constant.