The Price Elasticity of Demand Is 5

question 138

Multiple Choice

The price elasticity of demand is 5.0 if a 10 percent increase in the price results in a ________ decrease in the quantity demanded.

• A) 2 percent
• B) 5 percent
• C) 10 percent
• D) 50 percent

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Definitions:

Actual Price Level

Refers to the current general level of prices for goods and services in the economy, often measured by indices such as the Consumer Price Index (CPI).

State of Technology

Refers to the current level of technological development and innovation in a society or industry.

Actual Output

The real production level of goods and services in an economy within a specific period, measured by GDP.

Potential Output

The maximum amount of goods and services an economy can produce when it is fully employed, without causing inflation.