Bailey's Barber Shop Knows That a 5 Percent Increase in the Price

question 73

Multiple Choice

Bailey's Barber Shop knows that a 5 percent increase in the price of their haircuts results in a 15 percent decrease in the number of haircuts purchased. What is the elasticity of demand facing Bailey's Barber Shop?

• A) 0.05
• B) 0.10
• C) 0.15
• D) 3.0

Analyze scenarios illustrating the principle of substitution in the context of perfect substitutes and ordinary goods.

Determine the impact of price changes on the optimal consumption bundle.

Apply the concept of indifference curves to demonstrate preferences and trade-offs between two goods.

Explain the significance of the rate at which goods are substituted to maintain consumer satisfaction.

---

Definitions:

Psychodynamic Therapy

A therapeutic approach emphasizing unconscious processes and past experiences affecting current behavior, derived from Freudian psychology.

Lithium Treatment

The use of lithium, a mood stabilizer medication, in the management of mood disorders, especially bipolar disorder, to reduce the frequency and severity of manic and depressive episodes.

Psychotherapy Component

An element within psychotherapy, such as cognitive-behavioral techniques or psychodynamic insights, used during treatment.

Bipolar Disorders

A group of mood disorders characterized by alternating periods of mania and depression.