Explain the economic concept of price elasticity of supply. How is price elasticity of supply calculated?
What will be an ideal response?
Price elasticity of supply refers to the responsiveness of the quantity of a product supplied to a change in price. Price elasticity of supply is calculated by dividing the percentage change in the quantity of a product supplied by the percentage change in the product's price.
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Refer to the scenario above. What is the change in total revenue due to the price reduction?
A) The total revenue increases by $25. B) The total revenue increases by $50. C) The total revenue decreases by $105. D) The total revenue decreases by $175.
Everything else held constant, if the sum of the required reserve ratio and the excess reserve ratio is greater than one, an increase in the currency-deposit ratio causes the M1 money multiplier to ________ and the money supply to ________
A) decrease; increase B) increase; increase C) decrease; decrease D) increase; decrease