If the Quantity Supplied of Candy Increases by 10% When

question 303

Multiple Choice

If the quantity supplied of candy increases by 10% when the price of candy increases by 20%, which of the following is true?

• A) Supply for candy is elastic, and price elasticity of supply = 2.0.
• B) Supply for candy is inelastic, and price elasticity of supply = 2.0.
• C) Supply for candy is elastic, and price elasticity of supply = 0.5.
• D) Supply for candy is inelastic, and price elasticity of supply = 0.5.

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Definitions:

High Price

An amount that is considerably above the average or standard cost of an item or service.

Price War

A competitive situation where rival companies continuously lower prices to undercut each other, aiming to increase market share.

Price Sensitive

A characteristic of consumers who are highly responsive to changes in prices, affecting their willingness to buy products or services.

Promotional Campaign

A series of advertisements or efforts aimed at increasing awareness or sales of a specific product or service.