If the Price Elasticity of Demand Is Equal to 4,a

question 107

Multiple Choice

If the price elasticity of demand is equal to 4,a 1 percent increase in price will cause the quantity demanded to ____ by ____ percent.

• A)decrease; 25
• B)increase; 4
• C)decrease; 1/4
• D)decrease; 4
• E)increase; 1/4

---

Definitions:

Proportion

A statistical measure that reflects the fraction of the total number of occurrences for a specific outcome.

Hypotheses

Formally proposed explanations for a phenomenon, which are typically tested through research and experiments to be supported or refuted.

Z Statistic

The Z statistic, or Z-score, is used in hypothesis testing, measuring the number of standard deviations a datapoint is from the population mean.

P-value

A measure in statistical hypothesis testing representing the probability of obtaining a result at least as extreme as the one observed, under the assumption that the null hypothesis is true.