If the Price Elasticity of Demand Is 1

question 76

Multiple Choice

If the price elasticity of demand is 1.4, a 10 percent increase in the price of the good results in

• A) a 14 percent increase in the quantity demanded.
• B) a 1.4 percent increase in the quantity demanded.
• C) a 1.4 percent decrease in the quantity demanded.
• D) a 14 percent decrease in the quantity demanded.
• E) There is not enough information to answer this question.

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Definitions:

Producing Electricity

The process of generating electric power from sources of primary energy such as coal, natural gas, nuclear, solar, or wind energy.

Economic Inefficiency

A situation where resources are not utilized in the most productive way, leading to lost potential output or welfare.

Profit-Maximizing Price

The price at which a company can make the most profit, considering the balance between price and quantity sold.

Short-Run Monopoly

A market structure where a single firm dominates the market temporarily, possibly due to patents or market conditions that are expected to change.