If the Price Elasticity of Demand for Cigarettes Is 0

question 21

Multiple Choice

If the price elasticity of demand for cigarettes is 0.4,

• A)The demand is very elastic.
• B)A 10 percent increase in price will cause quantity demanded to fall by 40 percent.
• C)The demand is very inelastic.

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Definitions:

Antimacassars

Protective coverings designed to be placed on the back or arms of chairs to prevent them from being soiled by hair oil or other substances.

Demand Curve

A graphical representation showing the relationship between the quantity of a good consumers are willing to buy and its price level.

Profit-Maximizing Output

The point of maximum profitability for a company is reached when its marginal cost is equal to its marginal revenue, indicating the optimal production level.

Antimacassars

Protective coverings used on the backs and arms of furniture to prevent them from soiling or wear, typically made of fabric or lace.