One of the Reasons That Price Elasticities of Demand Are

question 100

Multiple Choice

One of the reasons that price elasticities of demand are always stated as positive numbers is because:

• A) the numerators and denominators of the formula are both negative.
• B) the numerators and denominators of the formula are both positive.
• C) price increases always lead to increases in quantity demanded.
• D) price decreases always lead to decreases in quantity demanded.
• E) price elasticities are always negative, so we ignore the sign.

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Definitions:

Forecasting Models

Quantitative and qualitative models used to predict future data points, trends, or patterns, based on historical and current data.

Absolute Deviation

The absolute difference between each data point in a set and a point of central tendency, often the mean or median.

Autoregressive Model

A statistical model for analyzing time series data that uses the dependent relationship between an observation and a number of lagged observations.

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The interest rate charged on a mortgage loan, which can be fixed or variable, determining the amount of interest the borrower pays over the life of the loan.