If the Elasticity of Demand for the Latest American Idol

question 25

Multiple Choice

If the elasticity of demand for the latest American Idol CD is 1.4,this means:

• A)few substitutes exist.
• B)a 1% increase in the price leads to a 14% reduction in quantity demanded.
• C)a 10% decrease in the price leads to a 140% increase in quantity demanded.
• D)a 5% increase in the price leads to a 7% decrease in quantity demanded.

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Definitions:

Social Desirability Bias

A tendency for respondents to answer questions in a manner that will be viewed favorably by others, often leading to inaccuracies in self-report measures.

Goals of Science

The objectives of scientific inquiry, generally including the description, prediction, explanation, and control of natural phenomena, based on empirical evidence and systematic observation.

Correlation

A statistical measure that describes the extent to which two variables change together, but does not imply causation.

Correlated

Correlated refers to a statistical relationship between two or more variables where a change in one is associated with a change in another, indicating a possible connection or causality.