The price elasticity of demand is the __________________ change in the quantity demanded of a good or service divided by the percentage change in the price.
a. quantity
b. percentage
c. relative
d. absolute
b. percentage
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Which of the following assumptions made in deriving the simple deposit multiplier is unrealistic?
A) The Fed sets the required reserve ratio. B) The Fed is able to affect the level of reserves in the banking system. C) Banks loan out all of their excess reserves. D) The simple deposit multiplier is equal to 1 divided by the required reserve ratio.
In terms of framing, we respond better to:
A. negative framing. B. neither; research has shown that framing ultimately doesn't matter. C. consistent framing. D. positive framing.
Answer the following statement true (T) or false (F)
1) The availability heuristic refers to people purchasing what is most easily accessible. 2) The self-serving bias causes people to act only in their self-interest. 3) The overconfidence effect exists when people underestimate their chances of being wrong. 4) Framing effects may cause the same person to view the same new situation differently depending on whether that new situation makes him or her better or worse off.
Figure 6.2 shows the cost structure of a firm in a perfectly competitive market. Suppose that market price falls to $6. If the firm produces at an output level that causes it to suffer an economic loss of $120, its average total cost (X) is:
A. $8. B. $7.50. C. $6.50. D. $4.