If the Price Elasticity of Supply for a Product Is

question 51

Multiple Choice

If the price elasticity of supply for a product is 5,and prices decrease 10 percent then supply will _____

• A)increase by 5 percent.
• B)increase by 10 percent.
• C)increase by 50 percent.
• D)decrease by 50 percent.
• E)decrease by 3 percent.

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Definitions:

Discount Rate

The discount rate utilized in determining the present value of future cash flows through discounted cash flow (DCF) analysis.

NPV

Net Present Value, a method used in capital budgeting to evaluate the profitability of an investment by calculating the present value of expected cash flows minus the initial cost.

Discount Rate

The interest rate used in discounted cash flow analysis to determine the present value of future cash flows.

Capital Rationing

The practice of limiting investments or expenditures in new projects due to budget constraints or capital availability.