If the Price Elasticity of Demand for a Commodity Is

question 89

Multiple Choice

If the price elasticity of demand for a commodity is greater than one,it implies that:

• A)an increase in supply will increase total revenues.
• B)a decrease in supply will increase total revenues.
• C)a price ceiling that lowers price below the market equilibrium will increase total the total consumer spending on that good.
• D)a price floor that raises price above the equilibrium will increase total the total consumer spending on that good.

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Definitions:

Parity Ratio

Parity ratio is a measure used in economics to compare the value of one aspect of the market or economy to another, often used in analyses of exchange rates and price levels.

Prices Paid

The actual amount of money exchanged for goods or services.

Prices Received

Prices received pertain to the amount of money sellers get in exchange for their goods or services in the market.

Tripled

To increase threefold or become three times as large in amount or number.