If the Demand for a Life-Saving Drug Was Perfectly Inelastic

question 1

Multiple Choice

If the demand for a life-saving drug was perfectly inelastic and the price doubled, the quantity demanded would

• A)also double.
• B)decrease by 50%.
• C)be cut in half.
• D)remain constant.

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Definitions:

Significance Level

The probability of rejecting the null hypothesis in a statistical test when it is actually true, often denoted by alpha.

Type I Error

The error that occurs when a true null hypothesis is incorrectly rejected, often denoted as the false positive rate.

Type II Error

A Type II error occurs when a statistical test fails to reject a false null hypothesis, indicating a false negative result.

Sample Size

The number of observations or data points collected in a statistical sample from a population.