The Income Elasticity of Demand for Eggs Has Been Estimated

question 1

Multiple Choice

The income elasticity of demand for eggs has been estimated to be 0.57.If income grows by 5 percent in a period, how will that affect demand for eggs in that period, all other things unchanged?

• A) demand will increase by more than 5.7 percent
• B) demand will increase by about 2.9 percent
• C) demand will decrease by more than 5.7 percent
• D) demand will decrease

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Definitions:

Type II Error

An error that occurs when a statistical test fails to reject a false null hypothesis, indicating a missed opportunity to detect an actual effect or difference.

Type I Error

The incorrect rejection of a true null hypothesis, also known as a "false positive".

Effect Size

A quantitative measure of the magnitude of the difference between groups or the strength of the relationship between variables in a statistical analysis.

Null Hypothesis

A statement positing that there is no significant difference or effect, often the initial assumption in hypothesis testing.