When the Total Amount Spent on a Commodity Remains Unchanged

question 46

Multiple Choice

When the total amount spent on a commodity remains unchanged as price is raised or lowered,demand is said to be

• A) of absolute elasticity.
• B) income inelastic.
• C) of unitary elasticity.
• D) price inelastic.
• E) price elastic.

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Definitions:

Producer Decisions

The selections made by firms regarding the production of goods or services, including what, how, and for whom to produce.

Consumer Demands

The desire, willingness, and ability of consumers to purchase goods and services at various price levels.

Market System

A market mechanism where the allocation of resources for investment, production, and distribution is driven by the forces of supply and demand, with the pricing of goods and services set freely within the market.

Minimize Cost

The process of finding the most efficient level of production, where the combination of inputs results in the lowest possible cost.