Suppose the Price of a Good Is $5 and Quantity

question 134

Multiple Choice

Suppose the price of a good is $5 and quantity demanded is 10 units. When price increases to $6, quantity demanded decreases to 9 units. What does this indicate?

• A) The quantity effect is larger than the price effect, indicating that demand is inelastic.
• B) The quantity effect is larger than the price effect, indicating that demand is elastic.
• C) The price effect is larger than the quantity effect, indicating that demand is inelastic.
• D) The price effect is larger than the quantity effect, indicating that demand is elastic.

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Definitions:

Significant

Importance in a statistical or substantive sense, often used to describe findings that are not likely to be due to chance.

Systems Competition

Competition among different standards or platforms that provide distinct systems of products, services, or technologies, rather than competition within a single system.

Operating System

The software that manages hardware and software resources on a computer, providing common services for computer programs.

Willingness to Pay

The maximum amount an individual is ready to spend to procure a specific good or service, reflecting the value of the good to the individual.