Assume That the Market for Pencils Is in Equilibrium and That

question 62

Multiple Choice

Assume that the market for pencils is in equilibrium and that demand is very price elastic. The popularity of digital tablets and electronic pens increases and demand for pencils declines. The equilibrium change in quantity demanded is:

• A) 0 (zero).
• B) relatively small.
• C) proportional to the shift in demand.
• D) relatively large.
• E) infinite.

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Definitions:

Minimum Amount

The smallest quantity or value permissible, often used in the context of financial transactions or requirements.

Fixed Expenses

Costs that do not change in total regardless of changes in the level of activity or volume, such as rent and insurance premiums.

Net Operating Income

A profitability metric that calculates a company's potential income by subtracting operating expenses from revenue, excluding taxes and interest.

Sugar Beets

A root vegetable that is primarily cultivated for sugar production.