Suppose That, as the Price of Product a Falls from $5

question 172

Multiple Choice

Suppose that, as the price of product A falls from $5 to $4, the quantity of A demanded increases from 2,000 to 6,000 units. In this case, what is the elasticity of demand, using the midpoint formula?

• A)0.9
• B)0.4
• C)4.5
• D)1.6
• E)3.0

---

Definitions:

Interaction Effect

The interdependent effect of multiple variables on the outcome variable, where the effect of one explanatory variable depends on the level of another variable.

F Statistic

A ratio used in the analysis of variance (ANOVA) to determine whether there are significant differences between the means of three or more groups.

P-value

The probability of observing results at least as extreme as those measured when the null hypothesis is true.

Stress Level

The degree of strain or pressure individuals feel in response to various situations.