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Elasticity is a term in economics which refers to the proportional change in two variables related to each other. For example, if you earn $80,000 a year and use cable TV service that costs you $100 per year, your demand for the cable service is likely to be what?

  1. Inelastic
  2. Perfectly inelastic
  3. Elastic
  4. Perfectly elastic

Answer

The correct answer is A) Inelastic.

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