If Price Elasticity of Demand for a Good Is 2

question 7

Multiple Choice

If price elasticity of demand for a good is 2.0, this implies that consumers would

• A) buy twice as much of the good if price falls by 10 per cent.
• B) require a 2 per cent cut in price to raise quantity demanded of the good by 1 per cent.
• C) buy 2 per cent more of the good in response to a 1 per cent cut in price.
• D) require at least a €2 increase in price before showing any response to the price increase.

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Definitions:

Short-rate Refund

A refund of a portion of a premium on an insurance policy, calculated using a method that is less than pro-rata, often involving a penalty for early cancellation.

Annual Premium

The amount paid annually for an insurance policy, providing coverage over a specified period of time.

Short-rate Refunds

A partial refund of premium on an insurance policy that has been canceled by the policyholder before its expiration, calculated using a method that is less than prorated.

Premium Rate

a higher price or cost than the standard, often for services that are considered to be of better quality or with added features.