An Economist Noticed That Nations with More TV Sets Have

question 14

Multiple Choice

An economist noticed that nations with more TV sets have higher life expectancy.He established a strong positive association between length of life and number of TV sets.Describe three different possible cause-and-effect relationships that might be present.

• A)Perhaps more TV sets cause higher life expectancy,higher life expectancy causes more TV sets,or both could be caused by a lurking variable such as the wealth of the nation.
• B)There is only one cause-and-effect relationship: more TV sets cause higher life expectancy.
• C)Perhaps more TV sets cause higher life expectancy,higher life expectancy causes more TV sets,or both could be caused by a lurking variable such as the TV sets brand.
• D)There is only one cause-and-effect relationship: higher life expectancy causes more TV sets.
• E)There are only two cause-and-effect relationships: more TV sets cause higher life expectancy,or higher life expectancy causes more TV sets.

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Definitions:

Price Elasticity

An indicator of the degree to which consumers' demand for a product is affected by fluctuations in its price, showing how sensitive buyers are to changes in cost.

Perfectly Elastic Demand

A market situation in which demand for a product is infinitely sensitive to changes in price.

Inelastic Demand

A situation where the demand for a product or service does not significantly change in response to price alterations.

Elasticity Value

A measure in economics indicating how the quantity demanded or supplied of a good responds to changes in price or income.