The Price Elasticity of Demand for a Variable Input Will

question 137

Multiple Choice

The price elasticity of demand for a variable input will be more elastic in all the following cases EXCEPT

• A) the greater the price elasticity of demand for the final product.
• B) the easier it is for a particular variable input to be substituted for by other inputs.
• C) the larger the proportion of total costs accounted for by a particular variable input.
• D) the shorter the time period being considered.

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Definitions:

Price Sensitivity

The degree to which the demand for a product or service is affected by changes in its price, illustrating consumer response to price adjustments.

Consumer Surplus

The contrast between what buyers are willing to offer for a good or service and the amount they actually spend.

Willingness to Pay

The maximum amount an individual is prepared to expend on a good or service to acquire it.

Cell Phone

A portable telephone that uses wireless technology to send and receive calls and data.