In the Purchase of the Sugar Substitute Splenda, You May

question 301

Multiple Choice

In the purchase of the sugar substitute Splenda, you may compare it to something you know about like real sugar. Although Splenda is more expensive than sugar, is purchased by many consumers because it contains no calories. This situation involves the consumer considering

• A)a marginal analysis.
• B)a profit equation.
• C)a break-even analysis.
• D)price elasticity of demand.
• E)a reference value

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Definitions:

Income Elasticity

A measure of how the demand for a good or service changes in response to a change in consumers' income.

Quantity Demanded

The total amount of a good or service that consumers are willing and able to purchase at a given price in a specified period of time.

Normal Good

A good or service whose consumption increases when income increases and falls when income decreases, price remaining constant.

Elasticity of Demand

A measure of how much the quantity demanded of a good responds to a change in the price of that good, signifying how the demand for a good can stretch or change.