Suppose You Have Surveyed a Few Industries and Obtained Information

question 194

Multiple Choice

Suppose you have surveyed a few industries and obtained information about the income elasticity of demand for their products.If you expect that the economy is headed for a long recession, you would advise people to look for jobs in an industry with

• A)a high positive income elasticity coefficient such as 5.
• B)a low positive income elasticity coefficient such as 0.8.
• C)a "high" negative income elasticity coefficient such as -4.
• D)a "low" negative income elasticity coefficient such as -0.2.

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Definitions:

Producer Surplus

The amount a seller is paid for a good minus the seller’s cost of providing it.

Economic Profits

The difference between total revenue and total costs, including both explicit and implicit costs, indicating the financial gain exceeding all costs.

Monopoly

A market structure characterized by a single seller dominating the market, with no close substitutes for the product, giving the seller considerable power over prices.

Elasticity Of Demand

A measure of how much the quantity demanded of a good responds to a change in price, indicating the sensitivity of consumers to price changes.