A Theory Asserts That Consumers Will Purchase Less of a Good

question 86

Multiple Choice

A theory asserts that consumers will purchase less of a good at higher prices than they will at lower prices, ceteris paribus. However, when the average price of cars increased throughout the 1990s, more cars were purchased. Which of the following best explains the apparent conflict between theory and data?

• A)​The ceteris paribus assumption is valid.
• B)​It is likely that variables other than the price and quantity of cars demanded were changing.
• C)​The theory is valid.However, the price and quantity data gathered by researchers was clearly measured incorrectly.
• D)​The theory must be invalid.

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Definitions:

Construct Validity

Consistency between a high score on a test and high level of a construct such as intelligence or leadership ability, as well as between mastery of this construct and successful performance of the job.

Criterion-related

Pertains to a method of evaluating the validity of a test by comparing its results with an external criterion.

Contexts

The circumstances or environments in which events occur, affecting their understanding and interpretation.

Generalizable

A quality of research findings or data that allows conclusions to be extended from the sample studied to larger populations or other contexts.