Demand is elastic whenever
a. price elasticity has an absolute value of 1
b. price elasticity has an absolute value greater than 1
c. price elasticity has an absolute value less than 1
d. price elasticity is negative
e. consumers respond to a change in price
B
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The market demand for wheat is Q = 100 - 2p + 1pb, where pb is the price of barley. If the price of wheat is $2, the price elasticity of demand
A) equals (-4/46). B) equals (-46). C) equals (-1). D) cannot be calculated without more information.
The infant industry argument for protection makes sense if the infant industry is
A. able to compete against foreign firms now, but not in the future. B. not able to compete against foreign firms now, but will be able to in the future. C. not be able to compete now or in the future. D. able to compete now and in the future.