If the price of orange juice rises 10%, and as a result the quantity demanded falls by 8%, the price elasticity of demand for orange juice is
A) -1.25.
B) inelastic.
C) Both A and B above.
D) Neither A nor B above.
B
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A simple economic model predicts that a fall in the price of bus tickets means that more people will take the bus. However, you observe that some people still do not take the bus even after the price of a ticket fell
a. Is the model incorrect? b. How would you test this model?
In utilizing unconventional monetary policy in 2010, the Federal Reserve purchased
a. real estate worth more than $2 trillion. b. $800 billion in Treasury bills. c. over $1 trillion in mortgage backed securities. d. $600 billion in long-term Treasury bonds.
Figure 8.2 shows demand and costs for a monopolistically competitive firm. At the profit-maximizing output level:
A. the firm is earning a positive economic profit and more firms are expected to enter the market. B. the firm is earning a zero economic profit and no firms are expected to enter the market. C. the firm is earning a negative economic profit and more firms are expected to leave the market. D. There is not sufficient information.
If the prices of goods begin to rise rapidly, people may find it difficult to maintain their lifestyles. Explain why
What will be an ideal response?