Which of the following statements is not true?
a. Price elasticity of demand for basic foods is low.
b. When price elasticity of demand is very high, we say there is brand loyalty.
c. The availability and price of substitutes affect the elasticity of demand for a good or service.
d. When goods have very low prices, the elasticity of demand is usually quite low.
e. Elasticities increase as the price of the good increases.
b
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Suppose Darby values a certain smart phone at $400 . Jake values the same smart phone at $300 . The pre-tax price of this smart phone is $250 . The government imposes a tax of $75 on each smart phone, and the price rises to $325 . The deadweight loss from the tax is
a. $150. b. $100. c. $50. d. $0.
Figure 10-1
If the price level in Figure 10-1 were 110,
a.
inventories would be accumulating.
b.
firms would have to lower their prices.
c.
aggregate quantity demanded would equal aggregate quantity supplied.
d.
shortages of goods would exist.