Assume an Economy Which Is Producing Only One Product

question 49

Multiple Choice

Assume an economy which is producing only one product.Output and price data for a three-year period are as follows. Refer to the above data.The nominal GDP for year 3 is:

• A)125 percent higher than the nominal GDP for year 1.
• B)50 percent higher than the nominal GDP for year 1.
• C)120
• D)30

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Definitions:

Inelastic

Describes a situation where the demand or supply for a good or service is relatively unaffected by changes in price.

Midpoint Method

A technique used to calculate the elasticity of demand or supply, offering a more accurate measure by averaging the beginning and end prices and quantities.

Price Elasticity

A measure of how much the quantity demanded of a good responds to a change in its price, indicating the sensitivity of demand to price changes.

Most Elastic

Refers to the responsiveness of demand or supply to changes in price or income, with "most elastic" indicating the greatest sensitivity.