Assuming Price Elasticity of Demand Is Reported as an Absolute

question 38

Multiple Choice

Assuming price elasticity of demand is reported as an absolute value, the measured elasticity for an inelastic demand would be:

• A) greater than zero.
• B) greater than one.
• C) less than one.
• D) exactly one.

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Definitions:

Marginal Cost

The financial outlay required to produce an additional unit of a product or service.

Average Total Cost

The total cost of production (fixed and variable costs combined) divided by the quantity of output produced, reflecting the cost per unit of output.

Time

A continuous measurement that exists uniformly and independently from everything else, used to sequence events and compare the durations of events and the intervals between them.

Marginal Output

The additional output that is produced by using one more unit of a particular input.