If the Price Elasticity of Supply Is 1

question 79

Multiple Choice

If the price elasticity of supply is 1.2,and a price increase led to a 5% increase in quantity supplied,then the price increase is about

• A)0.24%.
• B)4.2%.
• C)6%.
• D)6.2%.

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Definitions:

Adverse Selection

A situation in which one party in a transaction has more information than the other, often leading to an inefficient market outcome.

Real Estate

Property consisting of land or buildings, which can be bought, sold, or leased for residential, commercial, or industrial use.

Buyers

Individuals or entities that make a purchase of goods or services.

Adverse Selection

A situation where sellers have information that buyers do not, leading to a market dominated by lower-quality goods.