Assume the Price Elasticity of Demand for JT Chip Co

question 94

Multiple Choice

Assume the price elasticity of demand for JT Chip Co.chips is 4.0.If the company decreases the price of each bag of chips from $1.89 to $1.49,the number of bags sold will

• A)Decrease by 78 percent.
• B)Increase by 95 percent.
• C)Increase by 48 percent.
• D)Increase by 78 percent.

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Definitions:

Straight-Line Depreciation

A method of calculating the depreciation of an asset, dividing its cost by the number of years it is expected to be useful.

Income Tax Expense

The cost incurred by individuals or corporations due to income taxes, representing a financial charge for earning taxable income.

Capital Budgeting

The process of analysis and evaluation of investments in long-term assets, considering the potential returns and the risks involved.

Straight-Line Depreciation

An approach to distributing the cost of a tangible asset evenly over its operational life through annual allocations.