The Elasticity of Supply Coefficient for Bicycles Is Estimated to Be

question 251

Multiple Choice

The elasticity of supply coefficient for bicycles is estimated to be equal to 1.5. It is expected, therefore, that a 4% increase in price would lead to:

• A)​a 4% decrease in the quantity of bicycles supplied.
• B)​a 4% increase in the quantity of bicycles supplied.
• C)​a 6% decrease in the quantity of bicycles supplied.
• D)​a 6% increase in the quantity of bicycles supplied.

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Definitions:

Financing Activities

These activities generate cash inflows and outflows related to borrowing from and repaying principal to creditors and completing transactions with the company’s owners, such as selling or repurchasing shares of common stock and paying dividends.

Cash Inflow

Cash inflow is the movement of money into a business from various sources, including sales, investment income, and financing activities.

Cash Flows

The total amount of money being transferred into and out of a business, especially affecting liquidity.

Operating Activity

Activities directly related to the day-to-day operations of a business, including sales of products or services, and expenses.