Why do economists measure responsiveness of demand to price in percentage changes rather than in absolute changes?
Different units of measurement will give different values and it could be misleading. Elasticity measures responsiveness on the basis of percentage changes in price and quantity rather than on absolute changes. The elasticity formula solves the units problem because percentages are unaffected by units of measurement. For example, if the government expenditure doubles, it goes up by hundred percent, whether measured in millions or billions of dollars.
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Economists define the short run as a period of time so short that
A) the amount of output cannot be changed except under diminishing marginal returns. B) the amount of output cannot be changed at all. C) only one factor of production can be varied. D) at least one factor of production cannot be varied.
Public choice theorists say that the greater the number of potential voters in an election, the __________ the perceived benefits of voting held by each voter, and so the __________ the likely percentage turnout of voters
A) greater; lower B) greater; higher C) smaller; lower D) smaller; higher