Table 5-3 The Following Table Shows the Demand Schedule for a Particular

question 404

Multiple Choice

Table 5-3
The following table shows the demand schedule for a particular good.

-Refer to Table 5-3.Using the midpoint method,what is the price elasticity of demand when price rises from $9 to $12?

• A) 0.43
• B) 0.67
• C) 1.50
• D) 2.33

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Definitions:

Strictly Convex Preferences

Preferences where consumers always prefer mixtures of goods to extremes, demonstrating a consistent desire for variety.

Demand Curve

A graphical representation in economics that shows the relationship between the price of a good and the quantity of that good consumers are willing and able to purchase at varying price levels.

Homothetic Preferences

A consumer preference structure in which utility functions display constant returns to scale, meaning relative consumption patterns do not change as income levels change.

Substitution Effect

The change in consumption patterns due to a change in relative prices of goods, leading individuals to substitute cheaper goods for more expensive ones.