At the Midpoint of a Linear,downward-Sloping Demand Curve,the Price Elasticity

question 114

Multiple Choice

At the midpoint of a linear,downward-sloping demand curve,the price elasticity of demand is

• A) greater than one.
• B) equal to one.
• C) less than one but greater than zero.
• D) zero.
• E) infinite.

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Definitions:

Short Run

A time period in economics during which at least one input is fixed and cannot be changed by the firm, contrasting with the long run where all inputs are variable.

Average Variable Cost

The total variable cost divided by the quantity of output produced; it is the cost of producing an additional unit of a good or service.

Purely Competitive

Market structures characterized by many buyers and sellers, where no single entity has the market power to influence the price of a homogeneous product.

Profit-Maximizing

The process by which a firm adjusts its production and sale to achieve the highest possible profit.