In which of the following situations is the absolute price elasticity of demand for an item most likely to exceed a value of 1?
A) when there are very few close substitutes for the item
B) when there are very few producers of the item
C) when the item's share of expenses in consumers' budgets is very small
D) when there is considerable time to adjust to a change in the price of the item
Answer: D
You might also like to view...
The decision about how much money to hold is an application of the:
A. cost-benefit principle. B. scarcity principle. C. principle of comparative advantage. D. equilibrium principle.
General Motors estimates that U.S. demand for its newest product will be: Qus = 30,000 - 0.5P. Export demand will be Qex = 25,000 - 0.5P. The total market demand curve for this product will be a
A) straight line with a slope of -0.5. B) straight line with a slope of -1.0. C) kinked line with the kink at Q = 25,000. D) kinked line with the kink at P = 50,000. E) none of the above
As interest rates rise, the quantity of money demanded
A) falls. B) rises. C) stays the same. D) does not react to interest rate changes.
Relating to the Economics in Practice on page 362: The smart phone app which allows skiers at a slope to report weather conditions to others could be considered a form of
A. moral hazard. B. risk-loving. C. market signaling. D. asymmetric information.