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:

Utility

In economics, it represents a measure of satisfaction or happiness that consumers derive from the consumption of goods and services.

Efficient

The optimal allocation of resources to maximize the production of goods and services without wasting those resources.

Production Possibilities Frontier

A curve that shows the maximum efficient production level of one good for a given level of production for another, assuming fixed resources and technology.

Slope

In mathematics and economics, slope refers to the steepness, gradient, or inclination of a line, indicating the rate of change between two variables.