If Consumers Respond to a 10% Price Reduction by Buying

question 23

Multiple Choice

If consumers respond to a 10% price reduction by buying twice as much of a particular good,we would conclude that:

• A)there was excess demand at the original price.
• B)there was excess supply at the original price.
• C)the absolute value of price elasticity at the original price was greater than one.
• D)the absolute value of price elasticity at the original price was less than one.

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Definitions:

Ledger Accounts

Individual records that provide in detail the transactions associated with a company's assets, liabilities, equity, revenue, and expenses.

Trial Balance

A bookkeeping report that lists the balances of all ledgers in two columns, debits and credits, ensuring that total debits equal total credits.

Debit

An accounting entry that increases asset or expense accounts, or decreases liability, equity, or revenue accounts.

Credit

An accounting entry on the right side of an account ledger, recording increases in liabilities, equity, and revenue, or decreases in assets and expenses.