Suppose That Juan Carlos Is Filling Out a Survey That

question 298

Multiple Choice

Suppose that Juan Carlos is filling out a survey that he received in the mail.The survey asks him what he would do if the price of his favorite toothpaste increased.Juan Carlos reports that he would switch to a different brand.The survey asks what he would do if the price of all toothpastes increased.Juan Carlos reports that he must use toothpaste,so he would have to adjust his spending elsewhere.These examples illustrate the importance of

• A)changes in total revenue in determining the price elasticity of demand.
• B)a necessity versus a luxury in determining the price elasticity of demand.
• C)the definition of a market in determining the price elasticity of demand.
• D)the time horizon in determining the price elasticity of demand.

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Definitions:

Happiness

A state of well-being and contentment, often considered as an aim of human life.

Satisfaction

The fulfillment of one's wishes, expectations, or needs, or the pleasure derived from this.

Budget Line

An illustrative depiction of every possible pairing of two items that could be bought within a set budget at unchanging prices.

Slope

A measure of the steepness or incline of a line, often calculated as the ratio of the vertical change to the horizontal change between two points on the line.