Explain why the price elasticity of demand varies along a demand curve, even if the demand curve is linear
What will be an ideal response?
As we move down a demand curve, the percentage change in price (quantity) varies. When price is relatively high, a one unit change in price is small in percentage terms. When price is relatively low, a one unit change is much higher as a percent of the price. The same is true for quantity demanded. Given the inverse relationship between price and quantity along a demand curve and the formula for calculating elasticity, as we move down a demand curve, percentage change in price increases and the corresponding percentage change in quantity demanded decreases, causing the ratio of the two to get smaller in absolute terms.
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A) A + B B) A + B + C C) B + C D) A
Factors that led to worsening conditions in Mexico's 1994-1995 financial markets, but did not lead to worsening financial market conditions in East Asia in 1997-1998 include
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A. 2 units of X and 2 units of Y.
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C. 4 units of Y.
D. 6 units of X and 3 units of Y.
Economists define "rational" tastes as those which are objective and transitive. ?
Answer the following statement true (T) or false (F)