Which of the Following Is True Regarding Price Elasticity

question 107

Multiple Choice

Which of the following is true regarding price elasticity?

• A) The higher the elasticity, the lesser is the volume growth resulting from a 1 percent price reduction.
• B) Within the price indifference band, price changes have little or no effect on demand.
• C) If demand is elastic, sellers will consider increasing the price.
• D) Price elasticity does not depend on magnitude and direction of the contemplated price change.
• E) When demand is inelastic, sellers should lower prices in order to increase total revenue.

---

Definitions:

Service Department Charge Rate

The rate at which internal service departments charge other parts of the same organization for the services rendered.

Accounting Department

The division within a company responsible for managing financial records, ensuring compliance with accounting standards, and producing financial statements.

Service Department Cost

Involves the expenses associated with the departments that do not directly produce goods but provide support or services to other departments within an organization.

ABC Corporation

A hypothetical or generic naming convention used to represent a company in examples or case studies.