Demand Is Elastic If Elasticity Is

question 182

Multiple Choice

Demand is elastic if elasticity is

• A) less than 1.
• B) equal to 1.
• C) equal to 0.
• D) greater than 1.

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Definitions:

Base Rate Fallacy

A cognitive error where individuals ignore general statistical information (base rates) in favor of specific anecdotal information.

Representativeness Heuristic

A mental shortcut used to make decisions or judgments by comparing information to our mental prototypes and stereotypes.

Anchoring and Adjustment Heuristic

A cognitive bias where an individual relies too heavily on an initial piece of information (anchor) when making decisions, with insufficient adjustments made thereafter.

Gambler's Fallacy

The erroneous belief that if something happens more frequently than normal during a given period, it will happen less frequently in the future, or vice versa.