Author Question: Elasticity measures A) the slope of a demand curve. B) the inverse of the slope of a demand ... (Read 52 times)

jeatrice · **on:** Jul 1, 2018

Elasticity measures

A) the slope of a demand curve.
B) the inverse of the slope of a demand curve.
C) the percentage change in one variable in response to a one percent increase in another variable.
D) sensitivity of price to a change in quantity.

Question 2

Refer to Scenario 16.3. Is the current distribution Pareto optimal?

A) Yes.
B) No, as Sam has more of both goods.
C) No, as it is possible to find a way for Sam to sell tee shirts to Sally (and receive candy in return) that would make both of them better off.
D) No, as it is possible to find a way for Sam to sell candy to Sally (and receive tee shirts in return) that would make both of them better off.
E) Without knowing the prices of tee shirts and candy we cannot determine if this distribution is Pareto optimal.