Consider a medical breakthrough that led to the discovery of a simple microchip, which when inserted inside the human ear could prevent certain chronic diseases. The price elasticity of demand for that microchip would most likely be _____
a. highly elastic
b. highly inelastic
c. undefined
d. negative only for high prices
e. positive only for high prices
b
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A model:
A) is often based on simplifying assumptions that are not necessarily true. B) can be tested without data or statistics. C) is a more complex representation of reality than a theory. D) can never be used to predict the future but helps explain the past.
A. If a stock is expected to pay an annual dividend of $20 forever, what is the approximate present value of the stock, given that the discount rate is 5%?
b. If a stock is expected to pay an annual dividend of $20 forever, what is the approximate present value of the stock, given that the discount rate is 8%? c. If a stock is expected to pay an annual dividend of $20 this year, what is the approximate present value of the stock, given that the discount rate is 8% and dividends are expected to grow at a rate of 2% per year?