The price elasticity of supply is always a positive value because
i. there is a direct relationship between the price and the quantity supplied.
ii. as the equilibrium price increases, the equilibrium quantity also always increases.
iii. buyers are willing to pay a higher price for larger quantities.
A) i only
B) ii only
C) iii only
D) i and ii
E) ii and iii
A
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When generic drugs enter the market after the patent for a brand name drug expires, the price of the brand name drug often increases. This is usually due to
A) the demand curve for the brand name drug shifting in but becoming more inelastic. B) the demand curve for the brand name drug not shifting, but the marginal cost of producing the good increases. C) the demand curve for the brand name drug shifting in but becoming more elastic. D) the demand curve for the brand name drug not shifting, but loyal customers are willing to pay a higher price for the brand name drug.
You are given the following risky cash flows and certainty equivalent factors for a four-year project:
Certainty Period Cash Flow Equivalent Factor 1 $2,500 .95 2 3,000 .92 3 4,000 .88 4 3,000 .84 The initial investment for this project is $8,000, and the risk-free interest rate is 6%. Calculate the net present value of the project.