Demand is inelastic if
A. the percentage change in quantity demanded is greater than the percentage change in price.
B. the elasticity of demand is less than 1.
C. the demand for the good is sensitive to changes in price.
D. more units will be purchased if the price increases.
A. the percentage change in quantity demanded is greater than the percentage change in price.
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Which of the following must be present to reach a private solution to an externality problem?
A) The total number of people, creators of the problem and those affected, must be relatively large to justify negotiating a solution. B) The transactions costs to negotiate a solution must be relatively low. C) The government must approve the solution for it to be a legal solution. D) A majority of the parties affected by the externality must agree to a solution.
If prices in the diamond market become less volatile, all else equal, then the demand for diamonds ________ and the demand for gold ________
A) increases; decreases B) increases; increases C) decreases; decreases D) decreases; increases