If the Price of a Product Increases by 10 Percent

question 63

Multiple Choice

If the price of a product increases by 10 percent and the quantity demanded decreases by 15 percent, then the

• A)product has an elastic demand.
• B)product has an inelastic demand.
• C)product has an elastic supply.
• D)product has a unit-elastic demand.
• E)producer should raise the price further to increase total revenue.

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Definitions:

Social Security

A government program that provides financial assistance to people with inadequate or no income, particularly the elderly, disabled, and survivors.

Medicare

A federal health insurance program in the United States for people aged 65 and older, as well as for some younger individuals with disabilities.

Federal Budget Deficit

The financial shortfall when the federal government's expenditures exceed its revenues in a fiscal year.

Aggregate Supply

The total supply of goods and services available to a particular market from producers at various price levels, in the context of macroeconomic analysis.