Stating That Income Elasticity of Demand for Potatoes Equals 0

question 107

Multiple Choice

Stating that income elasticity of demand for potatoes equals 0.15 is equivalent to stating that if income

• A)decreases by 10 percent,potato purchases decrease by 1.5 percent.
• B)increases by 10 percent,potato purchases increase by 15 percent.
• C)decreases by 1.5 percent,potato purchases decrease by 10 percent.
• D)increases by 15 percent,potato purchases decrease by 10 percent.
• E)none of the above

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Definitions:

Implicit Costs

Indirect expenses that do not involve a direct cash outlay but represent an opportunity cost, such as using resources for one purpose over another.

Average Product

The output per unit of input, such as the number of goods produced per worker, used to measure productivity efficiency.

Marginal Product

The additional output that is produced by employing one more unit of a factor of production, holding other factors constant.

Total Product

The overall quantity of output that a firm produces, typically over a specific period, given a certain level of input.