In This Problem,demonstrate Your Knowledge of Percentage Rates of Change $\Delta$

question 2

Multiple Choice

In this problem,demonstrate your knowledge of percentage rates of change of an entire demand function (Hint: % $\Delta$ Q = E_P•% $\Delta$ P + E_Y•% $\Delta$ Y) .You have found that the price elasticity of motor control devices at Allen-Bradley Corporation is -2,and that the income elasticity is a +1.5.You have been asked to predict sales of these devices for one year into the future.Economists from the Conference Board predict that income will be rising 3% over the next year,and AB's management is planning to raise prices 2%.You expect that the number of AB motor control devices sold in one year will:

• A)fall .5%.
• B)not change.
• C)rise 1%r.
• D)rise 2%.
• E)rise .5%.

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Definitions:

Agreed Price

The price that both buyer and seller have consented to in a transaction or contract.

Liquidated Damages

A bona fide estimate of the monetary damages that would flow from the breach of a contract.

Consequential Damages

Indirect damages that do not flow directly from the act but occur as a consequence of the initial act, often involving loss of profit or other secondary losses.