Consider a Market in Which Price Is Initially $6 and Falls

question 86

Multiple Choice

Consider a market in which price is initially $6 and falls to $2. If we know that the price effect outweighed the quantity effect, we know the market is _____ and is more likely to be represented by _____.

• A) elastic; Graph A
• B) inelastic; Graph A
• C) elastic; Graph B
• D) inelastic; Graph B

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Definitions:

Z-score

A measure of how many standard deviations an element is from the mean of its distribution.

Standard Normal Curve

A specific instance of a normally distributed curve where the mean is 0 and the standard deviation is 1.

Percentile

A statistical measure indicating the value below which a given percentage of observations in a group of observations fall.

Right-Skewed

Describes a distribution of data where the tail on the right side of the histogram is longer or fatter than the left side, indicating that the mean and median are greater than the mode.