If the Price Elasticity of Demand Is 1

question 128

Multiple Choice

If the price elasticity of demand is 1.0,and a firm raises its price by 10 percent,the total revenue will

• A)Rise by 10 percent.
• B)Fall by 10 percent.
• C)Not change.
• D)Rise by 100 percent.

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Definitions:

Payback Period

The length of time that it takes for a project to fully recover its initial cost out of the net cash inflows that it generates.

Salvage Value

The anticipated value of an asset at the conclusion of its effective life.

Capital Budgeting

The process of evaluating and selecting long-term investments that are in line with the strategic goals of an organization.

Cash Poor

A situation in which an individual or entity has assets but lacks readily available cash to meet immediate spending needs.