How does one determine whether demand is elastic, inelastic, or unit elastic?
What will be an ideal response?
If the absolute value of the price elasticity of demand is greater than one, demand is elastic. If it is less than one, demand is inelastic. If the absolute value of the price elasticity of demand is equal to one, demand is unit elastic.
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Explain how a country with a current account deficit is a ripe candidate for currency devaluation
What will be an ideal response?
In 2011, Netflix raised prices on its DVDs and internet streaming plan. The Reed Hastings, CEO of Netflix, believes
a. Netflix is an industry leader thereby making the demand curve inelastic b. Netflix is an industry leader thereby making the demand curve elastic c. People are willing to pay more for the good d. There are many substitutes to Netflix's products