The Elasticity Is the Ratio of the Percentage Change in the Quantity

question 3

Multiple Choice

The elasticity is the ratio of the percentage change in the quantity divided by the percentage change in the price. Which of the following statements) is true about elasticity?

• A) The bigger the percentage change in quantity relative to the percentage change in price, the more elastic is demand.
• B) When quantity changes by more than price, the demand is said to be inelastic.
• C) When price changes by more than quantity, the demand is said to be elastic.
• D) When quantity changes by more than price, the demand is said to be elastic.
• E) both A and D

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Definitions:

Savings

The portion of disposable income not spent on current consumption but set aside for future use, often in a deposit account or as investments.

Investment

The action or process of allocating resources, usually money, with the expectation of generating an income or profit.

Aggregate Demand

The total demand for goods and services within an economy at a given overall price level and in a given time period.

Conclusions

The summary of findings or the final arguments presented after an analysis or discussion.