An elasticity of supply of 2.7 means that:
A. quantity supplied changes 2.7 units for each 1 percent change in price.
B. supply is inelastic.
C. quantity supplied changes 2.7 percent for each 1 percent change in price.
D. price changes by 2.7 percent for each 1 percent change in quantity supplied.
Answer: C
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The tables above show the marginal costs and benefits from production of paper. If the market is perfectly competitive and unregulated, the efficient amount of paper will be produced by setting a Pigovian tax of
A) $5 per ton. B) $10 per ton. C) $20 per ton. D) $40 per ton.
Buying a house during a recession may be a good idea if your job is secure because the Federal Reserve often
A) raises interest rates during recessions. B) lowers interest rates during recessions. C) sells Treasury bills to help the housing market. D) lowers income taxes during recessions.
Refer to Figure 9.6. Including the consumers' expected tax burden, the total change in welfare from this policy is
A) -$6000. B) -$5250. C) -$4500. D) $4500. E) $5250.
Countries with higher rates of saving
A) experience lower growth rates in the future. B) have a large population. C) have a greater number of poor people. D) have higher rates of growth.