Jill Borts Believes That the Price Elasticity of Demand for Her

question 183

Multiple Choice

Jill Borts believes that the price elasticity of demand for her economics textbook is relatively inelastic. She argues "I was told I had to purchase a book written by Hubbard and O'Brien that is required by my instructor. If I wanted to buy a mystery novel I would have many authors to choose from. Therefore, the demand for mystery novels is more elastic than the demand for my textbook." Is Jill correct?

• A) The demand for the textbook is more inelastic, but Jill's reasoning is incorrect. The reason the textbook has an inelastic demand is that it is more expensive than any novel.
• B) She is correct.
• C) She is confused. She should have concluded that the textbook has a more elastic demand than a novel.
• D) She is correct that the textbook has a more inelastic demand, but that is because most students pay for their textbooks with credit or debit cards. Most people pay for novels and other books with cash or by check.

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Definitions:

Poverty Line

A set financial threshold defined by governments or organizations, below which individuals or families are considered to be living in poverty.

Government Assistance

Financial aid or support services provided by the government to individuals or organizations in need, which may include welfare, healthcare, housing, and educational subsidies.

Cost of Living

The amount of money needed to sustain a certain level of living, including basic expenses such as housing, food, taxes, and healthcare.

Absolute and Relative

Absolute pertains to values or principles that are universally valid, without relation to other things. Relative refers to something that is considered in relation or in proportion to something else.