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The Absolute Value of the Price Elasticity of Demand for Telescopes

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True/False

The absolute value of the price elasticity of demand for telescopes is 1.5.Therefore, telescopes can be classified as a luxury.


Definitions:

Efficient Scale

The level of production at which a firm achieves the lowest average total cost, with economies of scale fully exploited.

Business-Stealing Externality

Negative impacts on existing firms due to entry of new competitors, which can steal customers and reduce profits.

New Firms

Companies that have recently entered the market, bringing innovation, competition, and potentially disrupting established market dynamics.

Existing Firms

Companies or businesses that are currently operational and active within a market or industry.

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