If an 8 Percent Decrease in the Price of Lobster

question 24

Multiple Choice

If an 8 percent decrease in the price of lobster leads to a 15 percent decrease in the quantity supplied of lobster, then the supply of lobster is

• A) unit-elastic.
• B) unitarily elastic.
• C) elastic.
• D) perfectly inelastic.

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Definitions:

Payback Method

A capital budgeting technique that estimates the time required to recoup the initial investment in a project.

Cash Flows

The inflows and outflows of cash and cash equivalents, representing the operating, investing, and financing activities of an entity.

Net Present Value

The difference between the present value of an investment project’s cash inflows and the present value of its cash outflows.

Internal Rate

Internal Rate, often referred to as Internal Rate of Return (IRR), is the rate of growth a project is expected to generate, used in capital budgeting to estimate the profitability of potential investments.