If the demand for a good is relatively elastic, this means that consumer purchases of the good are
a. not very sensitive to the price of the good.
b. highly sensitive to the price of the good.
c. unrelated to the price of the good.
d. unaffected by changes in the income level of consumers.
B
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If, in a perfectly competitive industry, the market price facing a firm is above its average total cost at the output where marginal revenue equals marginal cost, then
A) new firms are attracted to the industry. B) existing firms will exit the industry. C) market supply will remain constant. D) firms are breaking even.
Suppose that a per-unit subsidy is granted to each individual who consumes a product providing external benefits to society at large. Each individuals demand curve will shift ________, and the market demand curve for the product will shift ________
A) to the right; to the right B) to the right; to the left C) to the left; to the left D) to the left; to the right