When the Price of a Good Increased by 6 Percent

question 113

Multiple Choice

When the price of a good increased by 6 percent, the quantity demanded of it decreased 3 percent. Most likely, this good ________ and ________.

• A)is a necessity; has poor substitutes
• B)has poor substitutes; is a luxury
• C)is a necessity; has good substitutes
• D)is a luxury; is narrowly defined
• E)is a luxury; has experienced a recent price change

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Definitions:

Externality

A consequence of an economic activity experienced by unrelated third parties; it can be either positive (beneficial) or negative (harmful).

Education's Benefit

Refers to the positive impacts of education on an individual's abilities, earning potential, and societal contributions.

Externality

A cost or benefit arising from an economic activity that affects third parties who did not choose to incur that cost or benefit.

National Defense

The government activities, plans, and policies aimed at protecting a country's territory and citizens from external threats and maintaining overall security.