If a One Percent Increase in the Price of Oranges

question 151

Multiple Choice

If a one percent increase in the price of oranges leads to a five percent increase in the quantity supplied, the price elasticity of supply for oranges is ________.

• A)1/5
• B)1/2
• C)5
• D)2

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Definitions:

Law of Demand

A principle that states there is an inverse relationship between the price of a good or service and the quantity of it that consumers are willing to purchase.

Determinants of Market Demand

Factors that influence the total quantity of a good or service that consumers in a market are willing and able to purchase at various prices.

Change in Supply

An alteration in the quantity of a product that producers are willing and able to sell in the market, due to factors like changes in cost of production or technological improvements.

Quantity Supplied

The quantity supplied refers to the amount of a good or service that producers are willing to sell at a given price over a specified period.