If Demand for a Given Good Is Perfectly Elastic, It

question 166

Multiple Choice

If demand for a given good is perfectly elastic, it follows that

• A)as price changes, quantity demanded does not change.
• B)as price changes, quantity demanded changes by a larger percentage.
• C)as price changes only a small percentage, quantity demanded falls to zero.
• D)as income changes only a small percentage, quantity demanded changes by a very large percentage.
• E)none of the above

Grasp the implications of changes in production possibilities on resource allocation.

Understand the difference between normative and positive economic statements.

Recognize the role and importance of assumptions in economic theories.

Identify the challenges of applying the scientific method to economics due to the unpredictable nature of human behavior.

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Definitions:

Classical Conditioning

A learning process that occurs when two stimuli are repeatedly paired; a response that is at first elicited by the second stimulus is eventually elicited by the first stimulus alone.

Cognitive Dissonance

A state of psychological tension induced by dissonant relationships between cognitive elements.

Anticipated Reactions

Expectations about how others might respond to one's actions, which can influence decision-making processes.

Situational Constraint

An influence on behavior due to the likelihood that other persons will learn about that behavior and respond positively or negatively to it.