If the Price of a Product Increases by 10 Percent

question 129

Multiple Choice

If the price of a product increases by 10 percent and sales volume falls by 1 percent,demand for the product is

• A) Price elastic
• B) Price inelastic
• C) Price volatile
• D) Price subjective

---

Definitions:

Marginal Rate Of Technical Substitution

The rate at which one input can be substituted for another input while keeping the level of output constant.

Marginal Rate Of Substitution

The rate at which a consumer can give up some amount of one good in exchange for another good while maintaining the same level of utility.

North American Free Trade Agreement

A trade agreement among the United States, Canada, and Mexico to reduce trade barriers and promote economic exchange.

Efficient Equilibrium

A state of balance in a market where resources are allocated in the most efficient way possible, with no room for welfare improvement without making someone else worse off.