Suppose the Income Elasticity of Demand for a Private College

question 17

Multiple Choice

Suppose the income elasticity of demand for a private college education is equal to 1.5.This means that

• A)every $1 increase in income provides an incentive for a $1.50 increase in expenditures on private college education
• B)every $1.50 increase in income provides an incentive for a $1 increase in expenditures on private college education
• C)a 10 percent increase in income causes a 15 percent increase in the demand for a private college education
• D)a 15 percent increase in income causes a 10 percent increase in the demand for a private college education
• E)a 10 percent decrease in private college tuition will have a large enough income effect to increase spending on private college education by 15 percent

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Definitions:

Cognitive Developmental Stages

Theoretical stages proposed by psychologists to describe the progression of thinking and reasoning abilities as people grow.

Conceptual Frameworks

Structures of concepts and ideas that guide thinking, research, and practice in various fields by providing an organized way to make sense of related phenomena.

Piaget

A Swiss psychologist known for his pioneering work in child development, specifically his theory of cognitive development that describes how children construct a mental model of the world.

Formal Operational Stage

In Piaget’s theory, the stage of cognitive development (normally beginning about age 12) during which people begin to think logically about abstract concepts.