If an Increase in the Price of a Product from $1

question 97

Multiple Choice

If an increase in the price of a product from $1 to $2 per unit leads to a decrease in the quantity demanded from 100 to 80 units, then according to the averaging equation, the value of price elasticity of demand in absolute terms is:

• A) 0.33.
• B) 2.33.
• C) 0.25.
• D) 3.

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Definitions:

Recession Phase

Part of the business cycle characterized by a decline in economic activity, marked by falling GDP and rising unemployment.

Full Employment

A situation in an economy where all available labor resources are being used in the most economically efficient way, typically characterized by low unemployment.

Cyclical Unemployment

Unemployment attributed to the cyclical trends in the economy, typically increasing during recessions and decreasing during expansions.

Recovery Phase

A stage in the economic cycle where economic activity picks up and GDP starts to rise again after a period of decline or recession.