Which of the Following Would Cause the Price Elasticity of Demand

question 94

Multiple Choice

Which of the following would cause the price elasticity of demand for a variable input to be greater?

• A) The smaller the price elasticity of demand for the final product
• B) The longer the time period being considered
• C) The smaller the proportion of total costs accounted for by the variable input
• D) The harder it is for a variable input to be substituted for by other inputs

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Definitions:

Costs of Production

Costs of production refer to the total expenses incurred in manufacturing a product or offering a service, including raw materials, labor, and overhead costs.

Marginal Benefit

The additional benefit received from consuming one more unit of a good or service.

Marginal Cost

The cost of producing one additional unit of a good or service, which can vary depending on the level of production.

Rational Decision Maker

A theoretical entity in economics and decision theory that systematically and logically evaluates options before making a choice.