If the Price Elasticity of Demand for Good a Is

question 126

Multiple Choice

If the price elasticity of demand for good A is -1, then a 1% increase in

• A) consumer income will result in a 1% decrease in the demand for good A.
• B) consumer income will result in a 1% increase in the demand for good A.
• C) the market price of good A will result in a 1% increase in the quantity demanded of good A .
• D) the market price of good A will result in a 1% decrease in the quantity demanded of good A .

---

Definitions:

Probability

The measure of the likelihood that a particular event will occur, often expressed as a number between 0 and 1.

Insurance Market

A marketplace where individuals and entities can purchase insurance products to transfer risk and receive financial protection against loss.

Asymmetric Information

A situation in which one party in a transaction has more or better information than the other party, often leading to an imbalance in a transaction.

Major Theft

The act of stealing property of significant value or large quantities of items.