Suppose We Find That the Price Elasticity of Demand for a Product

question 218

Multiple Choice

Suppose we find that the price elasticity of demand for a product is 3.5 when its price is increased by 2 percent. We can conclude that quantity demanded

• A)increased by 7 percent.
• B)decreased by 7 percent.
• C)decreased by 9 percent.
• D)decreased by 1.75 percent.

---

Definitions:

Perceived Personal Deprivation

An individual's feeling or belief that they are lacking in some respect compared to others.

Fundamental Attribution Error

The Fundamental Attribution Error is a cognitive bias where people tend to overemphasize personality-based explanations for behaviors observed in others while underestimating situational explanations.

Relative Deprivation

The perception that one is worse off relative to those with whom one compares oneself.

J-curve

An economic theory describing a country's trade balance that initially worsens following a depreciation of its currency but then improves beyond its original level.