What does the "price elasticity of demand" measure? What does a price elasticity of demand coefficient of 1.2 mean? Does the product have an elastic, unitary elastic or inelastic demand?
The price elasticity of demand measures buyer responsiveness to a price change. If the price elasticity of demand coefficient equals 1.2, this means that for every 1 percent change in price there will be a 1.2 percent change in the quantity demanded in the opposite direction. This implies that consumers are relatively responsive to a change in the price and therefore the demand for this product is elastic.
You might also like to view...
Suppose a legislature passes a law that mandates a 50% cut in toxic emissions. What type of analysis would most likely be used to determine how to implement this policy at the lowest cost?
a. Contingent valuation b. Cost-effectiveness analysis c. Positional analysis d. Precautionary principle e. Safe minimum standard
What is the conclusion in the prisoners' dilemma?
A) Firms should not enter a legal duopoly. B) Two prisoners acting in their own best interest harm their joint interest. C) There is no Nash equilibrium available to the prisoners. D) Prisoners do not act interdependently. E) Duopolies almost always reach their best outcome.