Assume That Demand for a Service Depends Upon Price and Income,where

question 26

Multiple Choice

Assume that demand for a service depends upon price and income,where price elasticity of demand [EP] = -0.6 and income elasticity [EY] = 1.2.If price falls by 4% and income rises by 2%,the quantity demanded of the service will _____.

• A)not be affected as the change in price will cancel the change in income
• B)increase by 6%
• C)increase by 4.8%
• D)decrease by 9.6%
• E)decrease by 2.4%

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Definitions:

Memory

Refers to the processes used for acquiring, storing, retaining, and later retrieving information and past experiences.

Placebo

A harmless pill, medicine, or procedure prescribed more for the psychological benefit to the patient than for any physiological effect.

Harmless Pill

A placebo or inert medication designed to have no therapeutic effect, often used in clinical trials.

Active Drug

A substance with therapeutic effects that is used in the treatment or prevention of diseases or disorders.