If the Price Is Reduced from $100 to $80 in Figure

question 7

Multiple Choice

If the price is reduced from $100 to $80 in Figure 20.1, ceteris paribus,

• A)Total revenue will decrease.
• B)Demand will increase.
• C)Quantity demanded will decrease.
• D)Total revenue will increase.

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Definitions:

Weber's Law

A principle in psychology that states the smallest change in a stimulus, such as weight or brightness, that can be detected is a constant proportion of the stimulus level.

Absolute Threshold

The minimum stimulus intensity required to detect a stimulus at least half the time.

Sensory Adaptation

The mechanism by which sensory receptors reduce their sensitivity to sustained stimuli as time progresses.

Signal Detection Theory

A psychological theory that describes how individuals decide on the presence or absence of a stimulus under conditions of uncertainty.