The Price Elasticity of Demand Is -1

question 39

Multiple Choice

The price elasticity of demand is -1.25, and the share of the tax borne by consumers is 0.80. What is the price elasticity of supply?

• A) 6
• B) 5
• C) 1.56
• D) 1

---

Definitions:

Credit Card Companies

Businesses that issue credit cards to consumers, facilitating electronic payment transactions and often offering credit facilities.

Monthly Credit Card Statements

Periodic summaries sent by credit card companies to cardholders, listing purchases, payments, and other transactions for the month.

Behavioral Economics

Behavioral economics studies how psychological, cognitive, emotional, cultural, and social factors affect the economic decisions of individuals and institutions and the consequences for market prices, returns, and resource allocation.

Availability Heuristic

An intellectual quick-step that employs readily recalled instances when contemplating a certain topic, notion, strategy, or judgment.