Refer to the Accompanying Table

question 5

Multiple Choice

Refer to the accompanying table.The price elasticity of demand of erasers is __________ when the price is lowered from $1.50 to $1.00.Sellers of erasers will __________ their total revenue from this price change.

• A)perfectly elastic; not change
• B)elastic; raise
• C)elastic; lower
• D)inelastic; lower
• E)inelastic; raise

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Definitions:

Capital Expenditures

Funds used by a company to acquire or upgrade physical assets such as property, industrial buildings or equipment to improve its long-term operations and growth.

Cash Dividends

A portion of a company's earnings distributed to shareholders in the form of cash.

Direct Method

A way of preparing the cash flow statement where actual cash flow information from the company’s operations is directly reported.

Accounts Receivable

The amount of money owed to a company by its customers for goods or services that have been delivered or used but not yet paid for.