All of the following observations concerning the elasticity formula are true except
A. the changes with which it deals is measured as a percentage change.
B. each of the percentage changes is calculated in terms of the average values.
C. the calculation considers both positive and negative signs.
D. each percentage change is taken as an “absolute value.”
Answer: C
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Borem is a big fan of wine from Trader Moe's. Moe's sells a high-quality expensive wine and a cheap low-quality wine. Borem buys both types but tends to buy more bottles of the cheaper wine
Borem later moves to a new city where he must drive a long distance to get his wine at Trader Moe's. Assuming the income effect is small, and that Borem still buys his wine from Moe's, how is he going to change his relative consumption of the expensive and cheap wines?
During certain periods in the past few decades, if one of the three major breakfast cereal producers in the United States announced a price increase, the other two announced a similar price increase. This is a good example of
a. monopolistic competition b. a cartel c. a pure monopoly d. the kinked demand curve model of oligopoly e. the price leadership model of oligopoly
Which of the following is an example of a normative statement? a. Higher unemployment rates are common among young people
b. Young people should learn how to prepare their own taxes. c. Auto insurance rates are generally lower for younger d. Persons under the age of 30 watch more movies than those over the age of 30.
Which of the following would NOT be included in the calculation of the GDP?
A. the value of the service of legally produced gambling in Las Vegas B. the value of the production of nuclear weapons C. the value of the services of a homemaker D. the value of a bottle of domestically made wine