"Price elasticity measures how many more units of a good that consumers will buy given a decrease in price." Do you agree or disagree? Explain
What will be an ideal response?
Disagree. Price elasticity measures the percentage change in quantity demanded in response to a percentage change in price. As such, the statement is not valid as the elasticity measure is unit free.
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An argument in favor of 100 percent reserve banking is that
A) a bank deposit is owned by the depositor, so the bank has no legal right to lend the deposit to someone else. B) banks should be allowed to lend deposits in order to increase their profits and strengthen the banking system. C) unregulated institutions would be riskier than regulated fractional-reserve banks. D) it would limit the precision of the central bank's control over the quantity of money.
Comment on the following statement: "Since product differentiation allows price competitors to establish some market power, it would be more efficient to not permit product differentiation."
What will be an ideal response?