Suppose You Learn That in 1,900, Households Spent About 40

question 23

Multiple Choice

Suppose you learn that in 1,900, households spent about 40 percent of their budget on food, and today, they spend about 10 percent of their budget of food. All else equal, this suggests that the price elasticity of demand for food:

• A)is probably negative.
• B)has always been very high.
• C)is probably lower now than it was in 1,900.
• D)is probably higher now than it was in 1,900.

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Definitions:

Master Budget

A comprehensive financial plan made up of a collection of smaller, specialized budgets that represent a company's operations and financial goals.