We use percent-changes in the formula for estimating the price elasticity of demand coefficient in order to:
A. Make the coefficient's value become independent of whether price goes up or down
B. Take the midpoints of P and of Q in the computation
C. Eliminate the negative sign of the coefficient
D. Make it irrelevant how we measure price: be it in cents, in dollars, or in thousands of dollars
D. Make it irrelevant how we measure price: be it in cents, in dollars, or in thousands of dollars
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An increase in the real interest rate is an example of a
A) pure substitution effect. B) substitution effect and a positive income effect. C) substitution effect and a negative income effect. D) substitution effect and an income effect whose sign depends on whether the consumer is initially a borrower or a lender.
An ad valorem sales tax can be thought of as
A) a proportional tax. B) not part of the tax base. C) a progressive tax. D) none of the above.