Assume That Demand Decreases by 3 Percent, the Absolute Value

question 58

Multiple Choice

Assume that demand decreases by 3 percent, the absolute value of price elasticity of demand is 1.0, and price elasticity of supply is 1.0. What is the percentage price change in this case?

• A) -1.5
• B) -0.5
• C) 0.5
• D) 1.5

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Definitions:

NATO

NATO, the North Atlantic Treaty Organization, is a military alliance formed in 1949 by countries in North America and Europe to provide collective security against aggression.

Pact of Brussels

An agreement signed in 1948 by five Western European nations, forming a mutual defense pact that preceded NATO.

Konrad Adenauer

The first Chancellor of the Federal Republic of Germany (West Germany) from 1949 to 1963, noted for his role in the country's post-war reconstruction and development.

Chancellor

A senior official who heads a government department or a university, varying significantly in specific duties and authority across countries and institutions.