The Price Elasticity of Demand for DVDs Is 2

question 327

Multiple Choice

The price elasticity of demand for DVDs is 2. If the price of a DVD increased by 2 percent, the quantity demanded will

• A) decrease by 2 percent.
• B) not change.
• C) decrease by 4 percent.
• D) decrease by 1 percent.

---

Definitions:

Positive Economics

An approach to economics that seeks to understand behavior and the operation of systems without making judgments. It describes what exists and how it works.

Normative Economics

An approach to economics that analyzes outcomes of economic behavior, evaluates them as good or bad, and may prescribe courses of action. Also called policy economics.

Inflation

The rate at which the general level of prices for goods and services is rising, eroding purchasing power.

Unemployment

The state of being without a job despite actively looking for work, measured as a percentage of the labor force.