Assume That the Coefficient of Elasticity of Product Demand Is

question 187

Multiple Choice

Assume that the coefficient of elasticity of product demand is 0.5 in industry A and is 3.2 in industry B. Other things equal, labor demand will be

• A)more elastic in industry A than in B.
• B)relatively elastic in both industries A and B.
• C)more elastic in industry B than in A.
• D)relatively inelastic in both industries A and B.

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Definitions:

CPI

This index reflects the mean shift in costs over time for a collection of consumer goods and services as experienced by urban buyers.

Ear of Corn

An ear of corn is the part of the corn plant that contains the kernels, which are the seeds of the plant, encased in a husk.

Nominal Interest Rate

The interest rate before adjustments for inflation, often reported on a per annum basis.

Real Interest Rate

The interest rate adjusted for inflation, reflecting the true cost of borrowing and the real yield to savers and investors.