Suppose You Are the Manager of a Local Water Company

question 92

Multiple Choice

Suppose you are the manager of a local water company, and you are instructed to get consumers to reduce their water consumption by 10 percent. If the price elasticity of demand for water is −.25, by how much would you have to raise the price of water?

• A) 10 percent
• B) 25 percent
• C) 40 percent
• D) 100 percent

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Definitions:

Securities Exchange Act

A U.S. law enacted in 1934 to govern the trading of securities, such as stocks and bonds, aimed at protecting investors from fraud.

Solicitation of Proxies

The process by which shareholders are asked to delegate their voting power to representatives to vote on their behalf at shareholder meetings.

Section 12

A specific segment or part within a legal document or statute that addresses a particular point of law.

Section 14(a)

Typically refers to a provision in the Securities Exchange Act of 1934 that deals with proxy solicitations.