An Economist Estimates That the Price Elasticity of Demand for Disposable

question 23

Multiple Choice

An economist estimates that the price elasticity of demand for disposable diapers is 0.67. This suggests that disposable diaper producers could:

• A) advertise more to raise the price elasticity of demand.
• B) encourage more parents to use cloth diapers.
• C) lower the price of disposable diapers to raise more revenue.
• D) raise the price of disposable diapers to raise more revenue.

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Definitions:

Passionate

Having, showing, or characterized by intense, strong feelings or enthusiasm towards an activity, person, or concept.

Fatuous

Lacking intelligence or sense; foolishly insipid.

Exchange Relationships

Relationships based on reciprocal exchange of benefits or services, guided by the principle of quid pro quo.

Societal Progress

The development and improvement of society through advancements in education, technology, science, and social norms leading to a better quality of life.