If a Pizza Hut Restaurant near Campus Reduces Its Pizza

question 90

Multiple Choice

If a Pizza Hut restaurant near campus reduces its pizza prices by 15 percent, and as a result, its total revenue from pizza sales increases, this indicates that the price elasticity of demand was

• A) elastic.
• B) of unitary elasticity.
• C) inelastic.
• D) equal to 0.15.

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Definitions:

MR

Marginal Revenue, which is the additional income from selling one more unit of a good or service.

Profit-Maximizing

The process of increasing the financial gain of an entity as much as possible through various strategies and decisions.

Market Price

The present rate at which a service or asset is available for purchase or sale in the market.

Perfectly Competitive

A market structure where many firms offer a homogeneous product, there are no barriers to entry or exit, and every company is a price taker.