Jill Borts Believes That the Price Elasticity of Demand for Her

question 139

Multiple Choice

Jill Borts believes that the price elasticity of demand for her economics textbook is relatively inelastic.She argues "I was told I had to purchase a book written by Hubbard and O'Brien that is required by my instructor.If I wanted to buy a mystery novel I would have many authors to choose from.Therefore, the demand for mystery novels is more elastic than the demand for my textbook." Is Jill correct?

• A)The demand for the textbook is more inelastic, but Jill's reasoning is incorrect. The reason the textbook has an inelastic demand is that it is more expensive than any novel.
• B)She is correct.
• C)She is confused. She should have concluded that the textbook has a more elastic demand than a novel.
• D)She is correct that the textbook has a more inelastic demand, but that is because most students pay for their textbooks with credit cards. Most people pay for novels and other books with debit cards.

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Definitions:

'Sell' Itself

When a product, service, or idea is so appealing or well-marketed that it requires minimal effort to persuade consumers to purchase or adopt it.

Tangible Capital

Physical assets owned by a firm or individual that are used in the production of goods and services, such as machinery, buildings, and vehicles.

Capital

The collection of physical and financial assets used by an individual or organization to produce goods and services.

Services

Services like accounting, banking, cleaning, consulting, education, insurance, professional knowledge, medical care, and transportation that cannot be physically touched.