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:

Normal Distributions

A distribution where the likelihood of data occurring decreases as the distance from the mean increases, all the while maintaining a symmetrical shape around the mean.

Discrete Random Variable

A random variable that can take on only a finite or countably infinite set of distinct values.

Text Messages

Short, digital communications sent over cell phone networks.

Probability Distribution

A mathematical description of the range of possible outcomes of a random variable, including the frequency or probability of each outcome.