Using the Midpoint Method,the Price Elasticity of Demand for a Good

question 248

Multiple Choice

Using the midpoint method,the price elasticity of demand for a good is computed to be approximately 0.75.Which of the following events is consistent with a 10 percent decrease in the quantity of the good demanded?

• A)a 7.5 increase in the price of the good
• B)a 13.33 percent increase in the price of the good
• C)an increase in the price of the good from $7.50 to $10
• D)an increase in the price of the good from $10 to $17.50

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Definitions:

Perceived Inequity

The sense of feeling under-rewarded or over-rewarded in comparison with others.

Inputs Ratio

Measurement comparing the amount or quality of resources used to the output or results achieved, often used in productivity and efficiency analysis.

ERG Theory

A theory of human motivation that categorizes needs into three groups: Existence, Relatedness, and Growth, suggesting that individuals seek to fulfill these needs in a hierarchical order.

Existence Needs

Basic human needs for physiological and material well-being, such as food, shelter, and safety, based on Abraham Maslow's hierarchy of needs.