Average Annual Consumer Incomes Rise from $50 000 to $60

question 14

Multiple Choice

Average annual consumer incomes rise from $50 000 to $60 000,pushing up the quantity demanded for cars in a given region from 750 000 to 1.25 million.The numerical value of the income elasticity of cars is therefore:

• A)0.33
• B)3.33
• C)2.75
• D)0.36
• E)-0.36

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Definitions:

Monopoly

A market structure characterized by a single seller or producer dominating the entire market, facing no competition.

Linear Demand Curve

A graphical representation that shows a straight-line relationship between the price of a good and the quantity demanded.

Profit-Maximizing

The strategy employed by a business to identify the optimum price and quantity of production for maximizing earnings.

Price-Elastic

A term that describes how sensitive the demand for a good or service is to changes in its price; high elasticity means demand changes significantly with price changes.