The Condition of Scarcity

question 49

Multiple Choice

The condition of scarcity:

• A) cannot be eliminated.
• B) prevails in poor economies.
• C) prevails in rich economies.
• D) All of these.

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Definitions:

Perfectly Inelastic Demand

The case in which the quantity demanded does not respond at all to changes in the price; the demand curve is a vertical line.

Demand Curves

A graph representing the relationship between the price of a good and the quantity of that good buyers are willing to purchase at various prices.

Price Elasticity

The measure of how much the quantity demanded of a good responds to a change in the price of that good, defined as the percentage change in quantity demanded divided by the percentage change in price.

Estimating Price Elasticity

The process of calculating how sensitive the quantity demanded of a good is to a change in its price.