The Price Elasticity of Demand for Widgets Is 0

question 236

Multiple Choice

The price elasticity of demand for widgets is 0.8. Assuming no change in the demand curve for widgets, an increase in sales of 16 percent implies a(n)

• A)1 percent reduction in price.
• B)12 percent reduction in price.
• C)20 percent reduction in price.
• D)40 percent reduction in price.

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Definitions:

Null Hypothesis

An assertion in statistical analysis that proposes no significant difference or effect exists between certain characteristics or groups.

One-Sample Z Test

Used to compare a sample mean to a population mean.

One-Sample Z-Test

A statistical test used to determine if the mean of a single sample is significantly different from a known or hypothesized population mean.

Null Hypothesis

A statement that proposes no significant effect or relationship exists between variables.