If the price of a six-pack of Pepsi falls from $4 to $3 and the quantity purchased increases 80 percent, then demand is
A) inelastic.
B) elastic.
C) unit elastic.
D) perfectly inelastic.
E) perfectly elastic.
B
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Explain the rational expectations hypothesis
What will be an ideal response?
If total production is greater than total expenditures, then business firms
A) have underproduced. B) will step up production. C) will lower production. D) will experience decreases in inventory. E) a and b
The minimum efficient scale is:
A. the quantity after which it makes no sense for a firm to produce. B. the minimum quantity where a firm would be able to produce profitably. C. the output level beyond which the firm will not experience scale economies. D. the output level beyond which the firm will experience scale economies.
In a private closed economy where MPC = 0.8, if consumers reduce their spending by $10 billion and firms cut investments by $5 billion, then equilibrium real GDP will decrease by
A. $15 billion. B. $75 billion. C. $25 billion. D. $18.8 billion.