Suppose That the Value of the Short-Run Absolute Elasticity of Demand

question 138

Multiple Choice

Suppose that the value of the short-run absolute elasticity of demand for a good is 0.38. Then, we know the long-run absolute price elasticity of demand will be

• A) 0.
• B) greater than 0.38.
• C) elastic.
• D) less than 0.38.

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Definitions:

Absence

The state of being away from a place or the lack of something that is expected to be present.

Net Present Value

The calculation used to determine the present value of all cash flows associated with a project or investment, including initial capital outlay and all subsequent flows, discounted at a particular rate.

Electricity Bills

A periodic payment made by consumers for the electricity that they have consumed during a billing cycle.

Interest Rate

The percentage of the principal amount charged by lenders to borrowers for the use of money.