Other Things Equal, and Given That the Elasticity of Demand

question 77

Multiple Choice

Other things equal, and given that the elasticity of demand for health care is 0.2, a 10 percent increase in the price of health care in the United States will reduce the quantity of health care demanded by about

• A) 1 percent.
• B) 2 percent.
• C) 5 percent.
• D) 20 percent.

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Definitions:

Steel

A hard, strong alloy made primarily of iron and carbon, often used in construction and manufacturing.

Domestic Quantity

The amount of a product or service produced within a country's borders.

Demanded

Refers to the desire of consumers to purchase a good or service, coupled with the capacity to pay for it, at a certain price level.

Producer Surplus

Producer Surplus is the difference between what producers are willing to sell a good for and the actual price they receive, representing profit.