Two Economists from Ohio University Estimated That the Demand Curve

question 113

Multiple Choice

Two economists from Ohio University estimated that the demand curve for kerosene in Indonesia was such that a 10 percent increase in the price reduced the quantity demanded by 2.2 percent and that a 10 percent increase in the price of electricity increased the demand for kerosene by 1.6 percent.This indicates that (i) the demand for kerosene is price inelastic and (ii) kerosene and electricity are substitutes.Which of these two statements is correct?

• A)i and ii
• B)i not ii
• C)ii not i
• D)neither i nor ii

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Definitions:

Successive Concessions

A negotiation strategy where each party makes gradual concessions to reach an agreement.

Resistance Point

The price beyond which a negotiator is unwilling to go during a negotiation.

Fatigue Point

The moment at which physical or mental weariness reduces effectiveness or the ability to continue.

Distributive Bargainers

Negotiators who view the process as a fixed pie where any gain by one party is made at the expense of the other, promoting competitive tactics.