If the Price Elasticity of Supply Is 1

question 55

Multiple Choice

If the price elasticity of supply is 1.5,and a price increase led to a 3% increase in quantity supplied,then the price increase is about

• A)0.2%.
• B)0.5%.
• C)2.0%.
• D)4.5%.

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Definitions:

Marginal Revenue

The additional income earned from selling one more unit of a good or service, an important concept in pricing and production decisions.

Total Revenue

The total amount of money generated by the sale of goods or services by a company before any costs are subtracted.

Barrier To Entry

Factors that prevent or inhibit new competitors from easily entering an industry or area of business, including high startup costs, strict regulations, and significant technological challenges.

Monopolistic Industry

An industry dominated by a single firm that has control over the market prices and supply of a product or service.