We Calculate the Price Elasticity of Demand as the

question 67

Multiple Choice

We calculate the price elasticity of demand as the

• A) ratio of the percentage change in price to the percentage change in quantity.
• B) change in quantity divided by the change in price.
• C) ratio of the percentage change in the quantity demanded to the percentage change in price.
• D) equilibrium quantity divided by the equilibrium price.
• E) percentage change in the quantity demanded divided by the percentage change in income.

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Definitions:

Marginal Revenue

The rise in income generated by selling an additional unit of a product or service.

Average Total Cost

The cost per unit of output, calculated by dividing the total production cost by the total quantity produced.

AVC Curve

A graph representing the average variable cost of producing different quantities of output, typically U-shaped due to economies and diseconomies of scale.

Short-run Shut-down Price

The price level at which a firm's total revenue is equal to its variable costs, below which it should cease operations.