The Price Elasticity of New Automobile Purchases Is About 1

question 100

Multiple Choice

The price elasticity of new automobile purchases is about 1.2.This implies that an increase of $1,000 on a $10,000 automobile will

• A)reduce the number of autos sold by approximately 1.2 percent.
• B)increase the consumer expenditures on autos by approximately 1.2 percent.
• C)reduce the number of autos sold by approximately 12 percent.
• D)increase consumer expenditures on autos by approximately 12 percent.

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Definitions:

Average Total Cost Curve

A graphical representation illustrating the cost per unit of output, calculated by dividing the total cost by the quantity of output produced.

Marginal Cost Curve

An illustrated chart demonstrating how the cost for producing an additional unit of a product fluctuates with increased production volume.

Fixed Capital Input

Assets and resources used in production that are not consumed or changed and can be used repeatedly over time, such as machinery and buildings.

Variable Labor Input

Labor whose usage level can be changed in the short term to match the level of output production.