Suppose That If Poor Households Have a Price Elasticity of Demand

question 197

Multiple Choice

Suppose that if poor households have a price elasticity of demand for medical care of 0.70 and wealthy households have a price elasticity of demand for medical care of 0.10, then a 10% increase in the price of medical care would lead to poor households reducing their quantity demanded for medical care by

• A) seven times the amount that wealthy household reduce their quantity demanded for medical care.
• B) one-seventh the amount that wealthy households reduce their quantity demanded for medical care.
• C) one-tenth the amount that wealthy households reduce their quantity demanded for medical care.
• D) ten times the amount that wealthy household reduce their quantity demanded for medical care.

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