In Which of the Following Situations Would Supply Be the Most

question 40

Multiple Choice

In which of the following situations would supply be the most elastic?

• A)An auto parts manufacturer is operating at capacity.
• B)A real estate developer in Boston is looking to build condos on the waterfront.
• C)A furniture manufacturer is operating its factory 8 hours per day.
• D)A hotel has all of its rooms booked for each night of the next 3 months.

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Definitions:

Income Elasticity of Demand

A measure of how much the quantity demanded of a good changes in response to a change in consumers' income.

Midpoint Method

A technique used in economics to calculate the percentage change in quantity demanded or supplied between two points on a curve, providing an average elasticity for that range.

Cross-Price Elasticity of Demand

A measurement of how the quantity demanded of one good responds to a change in the price of another good, indicating whether they are substitutes or complements.

Cross-Price Elasticity

A measure in economics that shows how the quantity demanded of one good responds to a change in the price of another good.