Which of the Following Comparisons Is  True  Regarding Price Elasticity

question 6

Multiple Choice

Which of the following comparisons is  true  regarding price elasticity of demand?

• A) The demand for monthly car payments is less elastic than the demand for a monthly gym membership because the car payments require a greater share of the consumer's income.
• B) The demand for gasoline a year after a price change is less elastic than the demand for gasoline a week after a price change because consumers have had time to adjust.
• C) The demand for water is less elastic than the demand for diamonds because water is a necessity but diamonds are a luxury.
• D) The demand for cough syrup is less elastic than the demand for insulin because there are no close substitutes for insulin.

---

Definitions:

Natural Rate

A concept referring to the level of economic activity or rate (such as unemployment) that corresponds to the economy's long-term potential or equilibrium state.

Long-run Unemployment

A situation where the unemployment rate persists at a high level for a long period of time, often due to structural changes in the economy.

Bureau of Labor Statistics

A U.S. government agency responsible for collecting and reporting data on employment, labor market activity, working conditions, and price changes.

Average Workweek

The average number of hours worked per week by employees in a specific sector or economy.