Price elasticity of demand is measured using percentage changes. Why?
What will be an ideal response?
By using percentage changes, we are focusing on relative changes and not absolute changes. This means we don't have to worry about the units we use to measure either quantity or price. If someone buys 12 eggs a week at $1 a dozen and 8 eggs at 75 cents a dozen, we will get the same value for elasticity whether we use eggs, dozens of eggs, dollar, or cents as the measures. Percentage change is independent of the units chosen.
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If the demand curve for a good is a vertical line at Q = 1, then a decrease in the price of that good will:
A. decrease the quantity demanded. B. lead the quantity demanded to fall to zero. C. increase the quantity demanded. D. not change the quantity demanded.
Fact: Very few skyscrapers are found on rural farmlands, far outside the city. Why?
A) As opposed to city property, farmland cannot support a skyscraper's tremendous weight per square foot. B) Skyscrapers would spoil the view of the rural landscape. C) The opportunity cost of building skyscrapers in rural areas is too high. D) There are far too many dangers involved.
The natural rate of unemployment is fixed and unchanging
Indicate whether the statement is true or false
Refer to Figure 4.1, which shows Molly's and Ryan's individual demand curves for compact discs per month. Assuming Molly and Ryan are the only consumers in the market, what is the market quantity demanded at a price of $3?
A) 6
B) 9
C) 15
D) 20