If the Price Elasticity of Demand Is Equal to 2

question 11

Multiple Choice

If the price elasticity of demand is equal to 2, a 1 percent increase in price will cause the quantity demanded to ____ by ____ percent.

• A)decrease; 5
• B)increase; 2
• C)decrease; 0.5
• D)decrease; 2
• E)increase; 0.5

---

Definitions:

Financial Expertise

The knowledge and skills related to managing finances, including investment, analysis, and strategic financial planning.

Long-Term Planning

The process of setting goals and outlining strategies to achieve them over an extended period, typically several years.

Existing Family Company

A business that is owned and operated by members of the same family, often passed down through generations.

Entrepreneurial Activity

Initiatives taken by individuals to create, organize, and manage a business venture to make profit, often in the face of risk.