Suppose That the Value of the Short-Run Absolute Elasticity of Demand

question 52

Multiple Choice

Suppose that the value of the short-run absolute elasticity of demand for a good is 0.4. Then, we know the long-run absolute price elasticity of demand will be

• A) 0.
• B) greater than 0.4.
• C) elastic.
• D) less than 0.4.

---

Definitions:

Penetration Pricing

A pricing strategy where a product is introduced to the market with an initial low price to attract customers and gain market share quickly.

Target Profit Pricing

A pricing strategy where the price is set with a specific profit goal in mind, taking into account the cost of production and market demand.

Experience-curve Pricing

This pricing strategy involves reducing prices based on increased efficiency and lower costs that come with gained experience over time.

Experience-curve Pricing

A pricing strategy that utilizes the cost savings gained from learned efficiency as production volume increases over time.