Which of the Following Is Illustrated by the Big Mac

question 102

Multiple Choice

Which of the following is illustrated by the Big Mac Index published by The Economist?

• A) The law of one price
• B) The purchasing power parity theory
• C) The Fisher effect
• D) Flow of FDI
• E) The bandwagon effect

---

Definitions:

Elastic Demand

A market condition where the quantity demanded of a product changes significantly in response to price changes.

Inelastic Demand

A market situation where the quantity demanded of a product does not change significantly when its price varies.

Price Elasticity

A measure of how much the demand for a product changes in response to a change in its price.

Demand

The total quantity of a product or service that consumers are willing and able to purchase at a given price.