If the Price Elasticity of Supply for a Window Manufacturer

question 82

Multiple Choice

If the price elasticity of supply for a window manufacturer is 1.5,

• A)a 10% increase in the price of windows results in a 15% increase in the quantity of windows supplied.
• B)supply is considered to be inelastic.
• C)the manufacturer is likely operating very near capacity.
• D)All of the above are correct.

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Definitions:

Capacity

The maximum level of output that a company can sustain to make a product or provide a service, given available resources.

Operating Loss

A financial situation where a business's operating expenses exceed its revenues.

Variable Cost

Expenses that change in proportion with the production activity of a business.

Fixed Costs

Costs that do not change with the level of production or sales, such as rent, salaries, or insurance.