The Elasticity of Demand for a Good Is -0

question 76

Multiple Choice

The elasticity of demand for a good is -0.75. A 4 percent increase in price will cause a:

• A) 3 percent decrease in quantity demanded.
• B) 5.33 percent increase in quantity demanded.
• C) 5.33 percent decrease in quantity demanded.
• D) 0.19 percent decrease in quantity demanded.

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Definitions:

Investment

The expenditure on capital assets that may yield returns in the future, such as stocks, bonds, or physical property.

Price Level

A comprehensive mean of the existing prices for the economy's produced goods and services.

Consumption Spending

Expenditures by households on goods and services, excluding new housing.

Investment Spending

Expenditures on capital goods used to produce goods and services in future periods.