If a Given Reduction in Market Demand Causes the Market

question 147

Multiple Choice

If a given reduction in market demand causes the market equilibrium price to decrease by a very large percentage while equilibrium quantity purchased decreases by a very small percentage,

• A)market supply is inelastic (but not perfectly inelastic.)
• B)market supply is elastic (but not perfectly elastic.)
• C)market supply is perfectly inelastic.
• D)market supply is perfectly elastic.

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Definitions:

Cognitive Arousal Theory

A theory suggesting that arousal in the cognitive system can affect emotions and motivation.

Emotion

A complex psychological state involving an experiential, behavioral, and physiological response to a situation or stimulus.

Afraid

A feeling of fear or anxiety about a possible or imminent event or situation.

Cognitive Arousal Theory

A theory suggesting that emotions are a result of the interaction between cognitive interpretations of a situation and levels of physiological arousal.