The absolute price elasticity of demand for a product that has many good substitutes is probably
A. infinity.
B. less than 1.
C. greater than 1.
D. equal to 1.
Answer: C
You might also like to view...
In January, 2,500 quarts of ice cream are sold in Boston at $2 a quart. In February, 3,000 quarts are sold at $2.50 a quart. This change in quantity sold and price may have been caused by
a. a reduction in wages in the Boston area. b. the introduction of labor-saving automated ice cream-packing machinery. c. the release of a medical study showing that ice cream consumption improves mental health. d. the decision by Boston ice cream sellers to eliminate discount coupons.
Refer to the graph shown. If this graph represents a monopoly market, the equilibrium price and quantity will be:
A. Qd= 50 - 1,000P. B. Qd= 1,000 - 20P. C. Qd= 20 - 1,000P. D. Qd= 1,000 - 50P.
During a period of hyperinflation the Fed would probably be doing each of the following except
A. raising the discount rate. B. lowering reserve requirements. C. raising interest rates. D. selling securities on the open market.
Refer to the figure above. What is the price elasticity of supply between points A and B above?
A. 2 B. 1 C. -1 D. 1/3