If 20% Increase in the Price of a Good Leads

question 68

Multiple Choice

If 20% increase in the price of a good leads to a 60% decrease in the quantity demanded, then what is the price elasticity of demand?

• A)30.
• B)3.
• C)1/3.
• D)1/6.

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Definitions:

Expected Rate

The anticipated return or yield on an investment, often based on historical data, current market conditions, and forecasts.

T-bill

Short-term government securities that mature in a year or less, offering investors a safe and liquid means of investment.

Capital Allocation Line

A line on a graph that represents the risk-return trade-off of investments, showing the rates of return for efficient portfolios depending on the risk-free rate and the market risk.

Standard Deviation

A statistical measure of the dispersion or variability of a set of data points from their mean, used in finance to gauge the volatility of investment returns.