Explain how it is possible for a downward-sloping demand curve to have a constant slope but still have a variation of elasticity of demand along it
What will be an ideal response?
Slope measures rise over run. However, elasticities measure percent changes in the quantity demanded divided by the percent change in the price. Even along a linear demand curve with a constant slope the demand is more elastic in the upper left-hand corner and becomes less elastic as one moves down and to the right until it becomes unitary and then inelastic.
You might also like to view...
The Do-Good Company produces goods that provide benefits to society-at-large. If consumers of Do-Good's products fail to take external benefits into account
A) the demand curve will be too far to the left. B) the supply curve will be too far to the left. C) the demand curve will be too far to the right. D) the supply curve will be too far to the right.
The saving rate equals saving divided by:
A. income. B. assets. C. wealth. D. liabilities.
Would we expect the "average" person to take more time to learn about the car he or she is considering purchasing or about the issues in the upcoming U.S. Senate race in his or her state?
A) The Senate race, because it is critical that we elect the right people to government. B) The car, but there is no rational reason for this. C) The Senate race, because the person who is elected senator today may become president tomorrow. D) The car, because a mistake here can potentially cause him or her more harm on a day-to-day basis; in addition, a person is unlikely to be able to determine the outcome of a Senate race.
Which of the following explains why investment may be procyclical?
a) high installation costs for replacing, updating, and expanding the capital stock b) simultaneous investment by firms in various industries throughout the economy c) the correlation between current profits and investment expenditures d) the basing of expectations on current conditions e) all of the above