​Figure 53

question 57

Multiple Choice

​Figure 5.3. The figure shows the wage rate and the quantity of labor supplied in an unskilled labor market.
-If a 10 percent increase in the price of gasoline results in a 2 percent decrease in the quantity demanded of gasoline, then the elasticity of demand for gasoline is:

• A)equal to 0.2 and demand is inelastic.
• B)equal to 0.2 and demand is elastic.
• C)equal to 0.02 and demand is elastic.
• D)equal to 0.5 and demand is inelastic.
• E)equal to 0.5 and the demand is elastic.

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Definitions:

Fly By Night

A term describing businesses or individuals that appear transient, unreliable, or not committed to long-term obligations.

Output Levels

The quantity of goods or services produced by a company or an economic system within a specific period.

Fixed Cost

Costs that do not vary with the level of output or sales, such as rent, salaries, and insurance premiums.

Total Cost

The complete cost of production, including both fixed and variable costs.