The Smaller the Price Elasticity of Demand,the

question 18

Multiple Choice

The smaller the price elasticity of demand,the

• A)steeper the demand curve will be through a given point.
• B)flatter the demand curve will be through a given point.
• C)more strongly buyers respond to a change in price between any two prices P₁ and P₂.
• D)smaller the decrease in equilibrium price when the supply curve shifts rightward from S₁ to S₂.

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Definitions:

Prototypes

A cognitive representation of a typical member of a category, used to enhance memory and identification by providing examples that epitomize common features within that category.

Representativeness Heuristic

A thinking strategy based on how closely a new object or situation is judged to resemble or match an existing prototype of that object or situation.

Availability Heuristic

A mental shortcut that relies on immediate examples that come to a given person's mind when evaluating a specific topic, concept, method, or decision.

Additive Strategy

A decision-making approach in which each alternative is rated on each of the important factors affecting the decision and the alternative with the highest overall rating is chosen.