Suppose a Decrease in the Supply of Bottled Water Results

question 102

Multiple Choice

Suppose a decrease in the supply of bottled water results in a decrease in revenue.This indicates that

• A)the demand for bottled water is inelastic in the price range considered.
• B)the demand for bottled water is elastic in the price range considered.
• C)the supply of bottled water is inelastic in the price range considered.
• D)the supply of bottled water is elastic in the price range considered.

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Definitions:

Short Run

A time period in which at least one factor of production is fixed and cannot be changed, contrasting with the long run where all factors are variable.

Perfectly Competitive Firm

A company that operates in a market where there are many buyers and sellers, where it sells a homogeneous product and where there is free entry and exit from the market.

Marginal Cost

The bump in overall costs arising from the production of an additional product or service unit.

Profit Increase

A rise in the difference between a business's revenues and its expenses, indicating improved financial performance.