The Formula for the Price Elasticity of Demand

question 169

Multiple Choice

The formula for the price elasticity of demand

• A)relies on statistical data.
• B)is based fully on knowledge of the slope of the demand curve.
• C)in practice drops the sign and focuses on the magnitude.
• D)is valid only when the price of product increases.

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Definitions:

Tariff Revenues

Income that governments earn from imposing taxes on the import and export of goods.

Export Subsidy

An export subsidy is a government policy to encourage export of goods and discourage sale within the domestic market, by providing financial assistance or tax relief.

Domestic Price

The price of a good or service within a country; this can be influenced by tariffs, taxes, and supply and demand.

Free Trade

An economic policy that allows imports and exports between countries with minimal or no tariff barriers.