An Absolute Price Elasticity of Demand Equal to 0

question 133

Multiple Choice

An absolute price elasticity of demand equal to 0.4 indicates that a

• A) 4 percent increase in price leads to a 10 percent decrease in quantity demanded.
• B) 1 percent increase in price leads to a 4 percent decrease in quantity demanded.
• C) 0.4 percent decrease in price leads to a 1 percent increase in quantity demanded.
• D) 10 percent decrease in price leads to a 4 percent increase in quantity demanded.

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Definitions:

Complacency Trap

The mistake of being carried along by the flow of events.

Flow Of Events

The sequence and progression of activities or occurrences, often outlined to understand or manage processes or operations.

Ecological Fallacy

The error in reasoning that occurs when assumptions are made about individuals based on aggregate data for a group.

Ethnocentrism

The belief in the superiority of one's own ethnic group or culture, often resulting in prejudice and bias against other groups.