Which of the Following Describes a Situation in Which Demand

question 186

Multiple Choice

Which of the following describes a situation in which demand must be elastic?

• A)The price of pens rises by 10 cents, and quantity of pens demanded falls by 50.
• B)The price of pens rises by 10 cents, and total revenue rises.
• C)A 20 percent increase in the price of pens leads to a 20 percent decrease in the quantity of pens demanded.
• D)Total revenue does not change when the price of pens rises.
• E)Total revenue decreases when the price of pencils rises.

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Definitions:

Behavioral Economists

Economists who study how psychological, social, cognitive, and emotional factors affect economic decisions of individuals and institutions.

Rational Calculations

The process of making decisions based on logical reasoning and quantitative analysis to achieve the most favorable outcome.

Heuristics

Mental shortcuts or rules of thumb that simplify decision-making processes, often utilized in situations involving uncertainty or complexity.

Mental Resources

Cognitive capabilities and emotional resilience an individual can draw upon to perform tasks or face challenges.