Post Utme Osustech 2018 Economics Question 22

Practice objective / multiple choice question 22 from the 2018 Post Utme Osustech Economics examination.

Post Utme Osustech 2018 Economics Objective / Multiple Choice
Question 22 POST_UTME_OSUSTECH • 2018 • ECONOMICS • objective

A firm is considering increa\sing its production of a good, but it is concerned about the potential increase in its \costs. U\sing the concept of elasticity of demand, explain why the firm might choose to increase production, even if it means increa\sing its \costs.

Answer Options

Correct Answer A. The firm expects the demand for the good to be inelastic, meaning that a small increase in price will not lead to a significant decrease in quantity demanded.
B. The firm expects the demand for the good to be elastic, meaning that a small increase in price will lead to a significant decrease in quantity demanded.
C. The firm expects the demand for the good to be unit elastic, meaning that a small increase in price will lead to a small decrease in quantity demanded.
D. The firm expects the demand for the good to be perfectly inelastic, meaning that a small increase in price will not lead to a change in quantity demanded.
Correct Answer
A
Correct Option:
The firm expects the demand for the good to be inelastic, meaning that a small increase in price will not lead to a significant decrease in quantity demanded.

About This Question

This is Post Utme Osustech 2018 Economics Question 22. It is one of the objective questions from the 2018 Post Utme Osustech Economics examination.

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