Which One of the Following Situations Gives a Price Elasticity

question 42

Multiple Choice

Which one of the following situations gives a price elasticity of demand of 5.0? A 10 percent rise in price is accompanied by a

• A)2 percent increase in quantity demanded.
• B)5 percent decrease in quantity demanded.
• C)2 percent decrease in quantity demanded.
• D)50 percent decrease in quantity demanded.
• E)50 percent increase in quantity demanded.

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Definitions:

Prepaid Insurance Account

An asset account on the balance sheet representing insurance premiums that have been paid in advance and are gradually expensed over the coverage period.

Premium

An amount paid in excess of the nominal or face value of something, often associated with insurance policies or bonds.

Adjusting Entry

An accounting entry made at the end of a period to assign revenues to the period in which they are earned and expenses to the period in which they occur.

Create Deferral

The process of delaying the recognition of revenue or expenses to a future period to align with the accrual basis of accounting.