Assume the Price of a Product Rises from $2 to $3

question 105

Multiple Choice

Assume the price of a product rises from $2 to $3 and the quantity demanded of the product decreases from 600 to 400.The price elasticity of demand coefficient,using the midpoint formula,is:

• A) 0.40.
• B) 1.00.
• C) 1.60.
• D) 2.10.
• The change in quantity is (400 - 600)/(400 + 600)= 0.20 and the change in price is (3 - 2)/(3 + 2)= 0.20.Thus,price elasticity is 0.20/0.20 = 1.0.

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Definitions:

Sampling Distribution

The likelihood distribution associated with a statistic derived from a random sample.

Standard Deviation

A gauge of how much the values in a collection scatter around the mean, reflecting the range of variation.

Sampling Distribution

The probabilistic distribution specific to a statistic, based on randomly collected data.

Sampling Distribution

A statistical distribution that represents the frequency of various outcomes in a set of samples drawn from a larger population.