If the Price of a Good Decreases by 5 Percent

question 17

Multiple Choice

If the price of a good decreases by 5 percent and total revenue does not change, then the price elasticity of demand is

• A)perfectly elastic.
• B)unit elastic.
• C)equal to 0.5.
• D)equal to 1.05.
• E)perfectly inelastic.

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Definitions:

Semiannually

Taking place twice within a year or every half year.

Effective Interest Method

An accounting technique for calculating interest expense on bonds that amortizes discount or premium over the life of the bonds.

Straight-line Method

A depreciation technique that allocates an equal portion of the value of an asset over its useful life, used to gradually reduce the asset's book value.

Par Value

A nominal value or face value given to a share of stock at the time of its issuance, often used for legal and accounting purposes.