What is the price elasticity of demand? How is the price elasticity of demand calculated?
What will be an ideal response?
The price elasticity of demand is the responsiveness of the quantity demanded of a good to changes in the price of the good. Price elasticity of demand is calculated as the percentage change in quantity demanded divided by the percentage change in price. That is:
Ep = [(change in Q)/(Q1 + Q2)/2]/ [(change in P)/(P1 + P2)/2].
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The bargaining power of suppliers increases if
A) the input supplied is relatively standardized. B) the input in question is not a critical component of production. C) the cost of switching suppliers is relatively low. D) there are only a few competitors to the supplier.
Economists believe that countries recently suffering hyperinflation have experienced
A) reduced growth. B) increased growth. C) reduced prices. D) lower interest rates.