You Are the Owner of a Firm That Makes Generic

question 117

Multiple Choice

You are the owner of a firm that makes generic paper products. You estimate the income elasticity for your paper towels to be - 1.5. An upcoming economic expansion is expected to increase consumer income by 3 percent. As a result of the economic expansion, you should expect which of the following to occur?

• A)the demand for your paper products to increase by 4.5 percent
• B)the demand for your paper products to increase
• C)the demand for your paper products to decrease by 4.5 percent
• D)The demand for your paper products will be unaffected by the economic expansion.

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Definitions:

Opportunity Cost

The loss incurred by rejecting the immediate best alternative when arriving at a decision.

Fix A Meal

The process of preparing and cooking a meal.

Better Off

A term indicating an improvement in condition or well-being, often referring to economic improvement or increased welfare.

Constant Rate

A fixed rate at which something occurs or is applied over a particular period of time.