What Does the Price Elasticity of Demand Measure

question 94

Multiple Choice

What does the price elasticity of demand measure?

• A) what direction the demand curve shifts when the income changes
• B) what direction the demand curve shifts when the price changes
• C) how much the demand curve shifts when the price changes
• D) a producer's sensitivity to a price change
• E) a consumer's sensitivity to a price change

Recognize the impacts of globalization, including the role of multinational corporations, on global inequality.

Examine the consequences of the international division of labor and world systems theory.

Analyze the indicators and consequences of gender inequality at a global level.

Assess the relationship between colonialism, dependency theory, and current global stratification.

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Definitions:

Long-run Equilibrium

The state in which all factors of production and costs are variable, leading to a situation where no firm in the market wants to change its output level, assuming no external changes.

Producer Surplus

The difference between the actual price a producer receives (or producers receive) and the minimum acceptable price; the triangular area above the supply curve and below the market price.

Purely Competitive Market

A market structure characterized by a large number of small firms, identical products, and free entry and exit, which leads to firms being price takers.

Long-run Equilibrium

A state in which all firms in an industry are making normal profit, with no incentive for new firms to enter or existing firms to leave the market.