If a 5 Percent Decrease in the Price of a Good

question 42

Multiple Choice

If a 5 percent decrease in the price of a good produces a 5 percent increase in the quantity demanded, the price elasticity of demand is:

• A) perfectly elastic.
• B) perfectly inelastic.
• C) elastic.
• D) inelastic.
• E) unitary elastic.

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Definitions:

Uniformly Distributed

A distribution that has constant probability across the entire range of possible outcomes.

Test Statistic

A value calculated from sample data during a hypothesis test, used to decide whether to reject the null hypothesis.

New Tax Proposal

A suggested plan or policy for imposing taxes that has been put forward for consideration.

Uniformly Distributed

Describes a distribution where all outcomes are equally likely within a certain range.