The Elasticity of Supply Measures

question 204

Multiple Choice

The elasticity of supply measures:

• A) how quickly a surplus is eliminated.
• B) how quantity supplied responds to price changes.
• C) the profit margin of sellers' products.
• D) the costs of changing production methods.

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Definitions:

Weighted Average Cost

The total cost of goods available for sale divided by the number of goods available for sale, giving each item a weight proportional to its cost.

Cost of Equity

The return a firm theoretically pays to its equity investors, i.e., shareholders, to compensate them for the risk of investing in the company.

Pre-tax Cost

The cost of an investment or expense before the application of taxes, representing the gross expense.

Market Price

The rate at present for the purchase or sale of a service or asset.