Figure 7-3 -Figure 7-3 Depicts a Demand Curve with a Price Elasticity

question 3

Multiple Choice

Figure 7-3
-Figure 7-3 depicts a demand curve with a price elasticity that is

• A) perfectly elastic, implying that consumers will purchase as much as can be supplied at the market price.
• B) relatively inelastic, implying that a percent increase in price results in a smaller percent reduction in sales.
• C) unitary, implying that a percent change in price leads to an equal percent change in quantity demanded.
• D) perfectly inelastic, implying that the same amount will be purchased regardless of the price of the good.

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Definitions:

Replacement Price

The current cost of replacing an asset or inventory with a similar item.

Income-Sharing Ratio

The predetermined formula used among business partners or within an organization to divide profits or losses among stakeholders.

Revenue Per Employee

A measure of the efficiency of the business in generating revenues, which is computed as revenue divided by number of employees.

LLC Members

Individuals or entities that own a portion of a Limited Liability Company (LLC) and have rights and responsibilities as outlined in the LLC's operating agreement.