Suppose That the Price of a Money Clip Increases from $0.75

question 34

Multiple Choice

Suppose that the price of a money clip increases from $0.75 to $0.90 and quantity supplied rises from 8,000 units to 10,000 units.Use the midpoint formula to calculate the price elasticity of supply.

• A)1.22
• B)1.0
• C)0.82
• D)0.07

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Definitions:

Public Expenditures

Expenses made by the government for the development, maintenance of public services, and to support economic activities.

Crowd Out

A phenomenon where increased public sector spending reduces or eliminates private sector spending in the same market, often through higher interest rates or available financial resources.

Taxes

are compulsory financial charges or some other type of levy imposed upon a taxpayer by a governmental organization in order to fund government spending and various public expenditures.

Domestic Output

The total value of all goods and services produced within a country's borders in a specific time period, often referred to as Gross Domestic Product (GDP).