Elasticity Measures:​

question 76

Multiple Choice

Elasticity measures:​

• A)whether a price increase causes quantity demanded to increase or decrease.
• B)the strength of an economy's tendency to recover from recession.
• C)the responsiveness of decision makers to changes in price, income, or other variables.
• D)the profitability of investment in an industry.
• E)the long-run price trends in an economy.

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Definitions:

Constant Cost

A situation where the cost of producing one additional unit of a good or service is the same, regardless of the volume produced.

Equilibrium Quantity

The quantity of goods or services supplied and demanded at the equilibrium price, where the quantity supplied equals the quantity demanded.

Equilibrium Price

The price at which the quantity of goods supplied equals the quantity of goods demanded.

Constant Cost Industry

An industry in which the costs of production, including the prices of inputs, do not change as the total output of the industry changes.