If the Supply Curve of a Good Is Horizontal, Then

question 6

Multiple Choice

If the supply curve of a good is horizontal, then the elasticity of supply is:

• A)equal to zero.
• B)equal to one.
• C)greater than one but less than infinity.
• D)equal to infinity.
• E)less than one.

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Definitions:

Contribution Margin

The amount remaining from sales revenue after variable expenses are deducted, indicating how much revenue is contributing to fixed expenses and profit.

Labor Hours

A measure of the amount of work or effort in terms of hours spent by workers in producing goods or providing services.

Profitable Use

The utilization of resources or assets in a way that generates a financial gain.

Fixed Manufacturing Overhead

Costs in manufacturing that do not vary with the level of production, such as salaries of supervisors and rent of the factory.