Assuming Price Elasticity of Demand Is Reported as an Absolute

question 36

Multiple Choice

Assuming price elasticity of demand is reported as an absolute value,an inelastic demand has a measured elasticity:

• A) greater than zero.
• B) greater than one.
• C) less than one.
• D) exactly one.

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Definitions:

Marginal Private Benefit

The surplus value that consumers or producers get from buying or making an extra unit of a good or service.

Marginal Private Cost

Marginal private cost is the cost that a producer incurs in making an additional unit of a good or service, excluding any external costs.

Socially Optimal

A state in which resources are allocated in the most efficient and equitable manner from a societal perspective.

Network Externality

A situation where the value or utility of a product or service to one user increases with the number of other users of the same or compatible products or services.