Holding Everything Else Constant, the Absolute Value of the Price

question 275

Multiple Choice

Holding everything else constant, the absolute value of the price elasticity of demand for Saucony tennis shoes is ________ the price elasticity of demand for tennis shoes in general.

• A)less than
• B)equal to
• C)twice as great as
• D)greater than

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Definitions:

Minimum ATC

The lowest point on the average total cost curve, representing the most efficient scale of production.

Purely Competitive Market

An idealized market structure characterized by a large number of small firms, identical products, and free entry and exit, leading to perfect competition.

Long-run Equilibrium

The state in which all factors of production and costs are variable, leading to a situation where no firm in the market wants to change its output level, assuming no external changes.

Producer Surplus

The difference between the actual price a producer receives (or producers receive) and the minimum acceptable price; the triangular area above the supply curve and below the market price.