The Price of Train Travel Increases by 10% and the Demand

question 25

Multiple Choice

The price of train travel increases by 10% and the demand for train travel falls by 12.5%. The price elasticity of demand for train travel is:

• A) 1.25
• B) 0.50
• C) 0.75
• D) 1.00

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Definitions:

Collections

The process of gathering money that is owed by customers, often in relation to accounts receivable.

Required Production

The quantity of goods that a company needs to produce in order to meet customer demand.

Ending Raw Materials Inventory

The value of raw materials still on hand at the end of an accounting period, which have not yet been used in the production process.

Budgeted

Pertains to the financial plans for revenues and expenses that an organization sets for a specific time period.