A Correct Formula (Dropping All Minus Signs) for the Calculation

question 50

Multiple Choice

A correct formula (dropping all minus signs) for the calculation of the elasticity of demand between point Q₁, P₁ and point Q₂, P₂ is

• A)[(P₂ − P₁)/(P₂ + P₁)]/[(Q₂ − Q₁)/(Q₂ + Q₁)].
• B)[(P₂ − P₁)/P₁]/[(Q₂ − Q₁)/Q₁].
• C)[(Q₂ − Q₁)/(Q₂ + Q₁)]/[(P₂ − P₁)/(P₂ + P₁)].
• D)[(Q₂ − Q₁)/Q₂)]/[(P₂ − P₁)/P₂].

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Definitions:

Degrees Of Freedom

The number of independent pieces of information upon which a statistical estimate is based, minus the number of parameters estimated.

T-Distribution

A probability distribution that is used in hypothesis testing for small sample sizes, where the population standard deviation is unknown.

Random Variable

A variable whose values depend on outcomes of a random phenomenon, with each outcome having a certain probability.

Confidence Interval

A breadth of values, derived from sample observations, with a high chance of containing an unknown population parameter's value.