If the Price Elasticity of Supply Is Less Than 1

question 225

Multiple Choice

If the price elasticity of supply is less than 1, then supply is:

• A) price elastic.
• B) price inelastic.
• C) unit price elastic.
• D) very responsive to price changes.

---

Definitions:

Levered

Pertaining to the use of borrowed capital or debt to increase the potential return of an investment.

Break-Even EBIT

The level of Earnings Before Interest and Taxes that a company needs to achieve in order to cover all of its operating expenses without making a profit or loss.

Unlevered Cost

The cost of an investment or project that does not include the effects of borrowing; also known as the cost of capital with no debt financing.

Annual Coupon

A fixed interest payment made by a bond annually until its maturity date.