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.


d

Economics

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Explain how a currency drain affects the size of the money multiplier. In your explanation, suppose that a bank gains $1 million in new deposits and reserves

Further suppose that the desired reserve ratio is 10 percent and the currency drain is 50 percent.

Economics

Consider a used car market in which half the cars are good and half are bad (lemons). A rational buyer in this market should

A) save up and buy a new car. B) offer to pay a price equal to the most she would pay for a good car. C) offer to pay a price equal to the most she would pay for a lemon. D) offer to pay a price somewhere between the price she would pay for a good car and the price she would pay for a lemon.

Economics

Which of the following statements best describes the intermediate zone of the aggregate supply curve?

a. In the intermediate zone of the AS curve, movement in AD to the right will increase both the output level and the price level, while a movement in AD to the left would decrease both the output level and the price level. b. In the intermediate zone of the AS curve, movement in AD to the left will increase both the output level and the price level, while a movement in AD to the left would decrease both the output level and the price level. c. In the intermediate zone of the AS curve, movement in AD to the left will increase the output level and decrease the price level. d. In the intermediate zone of the AS curve, movement in AD to the right will increase the output level and decrease the price level.

Economics

Deflation will

A) increase aggregate demand. B) increase the quantity of real GDP demanded. C) decrease aggregate demand. D) decrease the quantity of real GDP demanded.

Economics