Most People Buy Salt Infrequently and in Small Quantities

question 217

Multiple Choice

Most people buy salt infrequently and in small quantities.Even a doubling of the price of salt is likely to result in a small decline in the quantity of salt demanded.Therefore

• A)the demand for salt will be perfectly inelastic.
• B)salt is a normal good.
• C)the demand for salt is relatively inelastic.
• D)the price elasticity of demand for salt is greater than 1 (in absolute value).

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Definitions:

Payoff Table

A tabular representation of the outcomes or payoffs associated with each possible action and state of nature, used in decision-making processes.

Prior Probabilities

The probabilities of different outcomes or hypotheses as assessed before taking into account new evidence or data.

Likelihood Probabilities

The probability of observing the given data under different parameter values of a statistical model, often used in the context of estimating those parameters.

Expected Payoff

The predicted value of an investment or decision under uncertainty, calculated as the sum of all possible outcomes weighed by their probabilities.