If the Percentage Change in Quantity Demanded Divided by the Percentage

question 51

Multiple Choice

If the percentage change in quantity demanded divided by the percentage change in price is:

• A) positive, demand is price elastic.
• B) negative, demand is price inelastic.
• C) less than 1 (absolute value), demand is price elastic.
• D) greater than 1 (absolute value), demand is price elastic.

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Definitions:

Profit-Maximizing Output

The level of production that maximizes a firm’s profits, determined by the intersection of marginal cost and marginal revenue.

Total Revenue

The total income earned by a firm from selling its products or services, calculated as the quantity sold multiplied by the selling price.

Marginal Revenue

The additional income earned by selling one more unit of a product or service.

Minimum AVC

The lowest point on the Average Variable Cost curve, indicating the most efficient scale of production where variable costs per unit are minimized.