Assume a Change in Price Causes the Price Elasticity of Demand

question 48

Multiple Choice

Assume a change in price causes the price elasticity of demand for a good (in absolute value) and marginal revenue to decrease.In this case we can conclude that the price of the good was:

• A)increased.
• B)held constant.
• C)decreased.
• D)cannot be determined.

---

Definitions:

Commercial Impracticability

A legal doctrine that excuses a party from performing a contract when events have occurred making performance excessively difficult, expensive, or harmful.

Frustration of Purpose

A legal doctrine that allows parties to be relieved from their contractual obligations if an unforeseen event undermines the contract's original purpose.

Substantial Performance

Contract performance that occurs when nearly all the terms of the agreement have been met, there has been an honest effort to complete all the terms, and there has been no willful departure from the terms of the agreement.

Unforeseen Circumstances

Events that a reasonable person would not be expected to anticipate.